Mainfreight breaks into Europe with $227m acquisition

New Zealand company transport and logistics company, Mainfreight, has chosen to debt fund the acquisition of Netherlands-based Wim Bosman by borrowing as much as 120 million euros. Photo / Sarah Ivey

Mainfreight is hitting up its bankers for as much as €120m ($NZ227m) to buy Netherlands-based company Wim Bosman.

The New Zealand company will pay at least €110 million for the Dutch transport and logistics provider, with a further €10 million payment if it achieves an earnings target before interest, tax, depreciation and amortisation of €20 million this year.

The acquisition, which is scheduled to be completed by April 1, will give Mainfreight a foothold in Europe.

Mainfreight will fund the purchase through bank debt, lifting its gearing ratio of "net debt to net debt plus equity" to about 48 per cent from 17.5 per cent. The company said it has renegotiated its existing debt facilities on more favourable terms, and can borrow up to $415 million in five-year multi-currency loans.

"Mainfreight has elected to debt fund the acquisition in preference to an equity-raising due to significant balance sheet capacity and the lower cost of debt relative to the cost of equity,"
it said in a statement.

"Cash flow generation from the combined entity, post-acquisition, will be more than sufficient to service interest costs and debt reduction."

The company boosted third-quarter profit by almost a fifth to about $18 million, as domestic trading lagged behind its offshore earnings. Mainfreight expects the acquisition will lift earnings per share.

Wim Bosman is privately-held, with 14 branches in six European nations. It has more than 1,000 transport units, more than 275,000 square metres of warehouse and cross-docking facilities, and about 1,400 staff.

"Wim Bosman is a well respected, profitable organisation which will provide Mainfreight with a significant European presence and opportunity to further grow its supply chain logistic services throughout the world," it said.

Mainfreight's shares rose 0.9 per cent to $8.12 in trading on Friday, and have gained 4.1 per cent this year.