KEY POINTS:
Freight and logistics company Mainfreight believes the acquisition of Australian privately owned operator Halford International will enable it to further grow its airfreight and international freight forwarding business.
The company announced yesterday that it had signed a call option deed to acquire all of the shares in Halford, an international freight and logistics provider, for approximately A$21 million ($26 million).
The call option could be exercised at Mainfreight's sole discretion and, pending the completion of certain conditions, the transaction was expected to close next month.
The price has been formulated on a six-times multiple of Halford's projected earnings before interest, tax, depreciation and amortisation (ebitda) for its financial year ending June 30.
Eighty per cent of the purchase price is to be paid on completion, and the remainder over a two-year period.
Group managing director Don Braid said barring any unexpected surprises in Halford's full-year results, the acquisition would go ahead.
Mainfreight had approached the company last year with the intention to acquire the business.
"It's a privately owned business so it was a matter of being able to work with them to ensure that it was the right time for them to sell, and for the benefits to flow to their people as much as to Mainfreight."
The acquisition provides Mainfreight with a bigger presence in the Australian international freight forwarding sector, he said.
Halford provides freight forwarding, customs clearance activities and logistics services to the market throughout Australia and New Zealand.
It has six branches in Australia and New Zealand, and a network of international agents throughout the world, including Japan, Germany and the United States.
Its sales revenue for the financial year to June is expected to exceed A$65 million, and earnings will be positive.
"This business allows us to further grow our abilities in both airfreight and international freight forwarding," said Braid.
There were also opportunities for cost savings, although Braid had no concrete figures.
"There's certainly synergies between the two businesses and the benefits would be good for both operations."
He expected no material changes at Halford.
"They have a very good operation and we're looking forward to working with their people to develop their business alongside our Mainfreight international operations. All the key management are staying.
"We look forward to the contribution that they'll make to the Mainfreight family."
Mainfreight shares closed down 3c at $7.33.
The company reported a net full-year profit increase of 83 per cent to $101.6 million last month, boosted by one-off gains from asset sales.
Net profit from continuing operations before one-offs was up 15.3 per cent to $40.8 million.
The company's revenues from outside New Zealand have now exceeded 57 per cent, with the expectation the ratio would continue to rise.
Australian domestic revenues rose 19.2 per cent to $148.7 million but ebitda declined 1.5 per cent to $11.85 million with the fourth quarter down 9.6 per cent. Ebitda in the Australian international division rose 17 per cent.
THE DEAL
* Mainfreight has signed a call option deed to acquire Halford International, an Australian-based privately owned, international freight forwarder and logistics provider.
* Halford has six branches in Australia and New Zealand, and a network of international agents throughout the world, including Japan, Germany and the United States.
* The deal values Halford at approximately A$21 million ($26 million).
* Mainfreight has sole discretion to exercise the call option, with 80 per cent of the purchase price to be paid on completion, and the remaining 20 per cent over a two-year period.
