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Mainfreight says the windfall from the A$85 million ($96 million) sale of its Australian-based Pan Orient Project Logistics and a majority shareholding in freight forwarding company LEP will give it more firepower to take over overseas companies.
The New Zealand transport and logistics company has reached conditional agreement to sell the two businesses to global logistics company Agility Group.
Mainfreight's managing director Don Braid said yesterday the proceeds from the sale would give it more freedom to negotiate acquisitions.
Mainfreight has been aggressively seeking acquisition opportunities in Australia and the US for the past few months.
Braid has said private equity firms were likely to push up acquisition prices in the logistics sector, but sees it as an opportunity rather than a cause for concern.
Shares in Mainfreight closed up 20c at $7.50. Mainfreight sold its 75 per cent shareholding in LEP to Agility - which is the other 25 per cent shareholder - for a very good price because of the competitive tension between the two companies, said Braid.
It also gave Mainfreight the ability to expand round the world without any responsibilities that it could have to Agility, which is also a global freight forwarding organisation, he said.
"It allows us to get on and do what we want to do without them determining the success of LEP or pulling strings on whether we wish to compete with them in certain countries around the world."
Pan Orient specialises in the supply of transport services to large projects in Australia and Papua New Guinea, in particular within the mining sector.
Mainfreight purchased Pan Orient as part of the Owens Group acquisition in 2003, and it is the last of the non-core Owens businesses to be sold.
The sale is subject to any necessary government approvals.
