Freightways buys Australia's Databank

Freightways said today it had bought Australian information management company, Databank Technologies.

It will pay up to A$30 million ($37.5m) over two years for the company.

An initial payment of about A$18m will be made during the first few weeks of ownership this month.

Two subsequent payments of up to about A$6m will be paid after the June year results of 2007 and 2008, if agreed annual earnings performance are achieved in those years.

Databank's ebitda (earnings before interest, tax, depreciation and amortisation) in the first year of ownership was forecast at A$2.7m.

The expected total price represented an effective multiple of seven times ebitda.

The purchase was expected to be immediately earnings positive for Freightways.

DataBank is the No 2 operator by market share in offsite data storage in Australia, Freightways managing director Dean Bracewell said.

He said the sector was an underdeveloped and a growing niche.

Databank has an operating culture similar to that of Freightways' existing New Zealand information management businesses, he said.

DataBank founders have been retained to assist DataBank senior management for a two-year period as part of the earn-out structure of the purchase.

"Although a small acquisition relative to the size of Freightways, it is expected that DataBank will be a catalyst for further offshore growth in niches where Freightways has proven capability," Mr Bracewell said.

The purchase will tie in with Freightways' data storage business in New Zealand, he said.

It diversified Freightways' interests geographically and built it deeper into the information management market, Mr Bracewell said.

Freightways operates courier services, business mail and information management.

Its shares were untraded today after closing yesterday on $4.00. They have traded between $2.90 and $4.15 in the past year.

- NZPA