SingPost to acquire further 37% interest in Australian subsidiary for A$175.4m
Bernadette Toh
POSTAL service provider Singapore Post (SingPost) is looking to acquire an additional 37 per cent stake in Freight Management Holdings (FMH), a fourth-party logistics service company incorporated in Victoria, Australia, for A$175.4 million (S$161.1 million) in cash.
This will bring SingPost’s total stake in FMH from 51 per cent currently to 88 per cent upon completion of the transaction.
SingPost, through its wholly-owned subsidiary SingPost Australia Investments (SPAI), first acquired a 28 per cent interest in FMH in December 2020. Later, SPAI raised its shareholdings to 51 per cent in November 2021, with a pathway to raise its shareholdings subsequently.
SingPost said on Wednesday (Jan 11) that the consideration for its latest acquisition deal will be paid out in two tranches, both of which will be funded by the group’s cash reserves and available bank loan facilities.
The group’s cash reserves amounted to S$435.8 million as at Sep 30, 2022.
Exercise periods for subsequent offers to buy granted to FMH vendors will be advanced, and evergreen call options will be granted for the remaining 12 per cent stake as a pathway to full ownership.
BT in your inbox
Start and end each day with the latest news stories and analyses delivered straight to your inbox.
SingPost highlighted FMH’s earnings accretion and strong financial performance since the group’s initial investment in the latter. It also said FMH has good growth momentum, evident from its increasing revenue and operating profit over the past few financial years.
Subject to relevant statutory approvals, the group expects its further acquisition of interest in FMH to complete by early 2023.
“The strategic acquisition of FMH is a key move in strengthening the SingPost group in the overseas logistics space,” said SingPost group chief executive Vincent Phang.
The acquisition will allow SingPost to offer customers technology-led integrated business-to-business and business-to-consumer logistics solutions in Australia, Phang added. He said: “This would play a key role in us being a logistics player of choice in the Asia-Pacific.”
Besides FMH, SingPost also owns CouriersPlease, a first and last-mile delivery courier network covering 90 per cent of Australia’s population.
Shares of SingPost were flat at S$0.53 as at 1.11 pm, after the announcement.
Copyright SPH Media. All rights reserved.
