Wednesday 30th October 2019
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Freightways will have something to talk about at tomorrow's annual meeting after it announced a $117 million acquisition of Bill Chill Distribution, which operates a fleet of more than 200 refrigerated trucks and trailers.
The NZX-listed courier and information management company will pay $117 million upfront, representing 80 percent of Big Chill's enterprise value, with the balance to be paid in 2022 based on its earnings performance. Freightways will fund the acquisition through existing and new bank debt, and the purchase will start contributing to earnings once the deal settles in the first half of next year.
"The acquisition of Big Chill represents a highly compelling transaction and will provide Freightways with both short and long-term growth opportunities, while further diversifying its earnings base," chief executive Mark Troughear said in a statement.
"Big Chill’s founders and senior management have done a fantastic job growing the business and we look forward to working together, recognising the strong cultural alignment between our two businesses."
Freightways chair Mark Verbiest told the New Zealand Shareholders' Association in September that the company had 40 potential acquisition targets in its sights, all of which revolve around the firm's core competencies in picking things up and dropping them off.
The purchase of Auckland-based Big Chill adds temperature-controlled fleets and facilities and introduces a new vertical market to Freightways. Cold storage also provides an avenue for future expansion, the company said.
The acquisition is expected to deliver modest earnings growth in the 2020 financial year, rising to a "mid-single digit" gain after that.
"Freightways expects to be able to realise a range of benefits from leveraging the respective strengths and areas of expertise of the combined businesses, plus some cost benefits in time," it said.
The shares fell 0.4 percent to $7.95 in trading today, although the deal was announced just before trading closed.
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