- $23.6 million is payable upfront
- $7.8 million consideration payable contingent on financial milestones
- Will be funded through cash reserves and debt facilities
Today, Silk Logistics Holdings (ASX: SLH) announced it has entered into a binding agreement to acquire Fremantle Freight & Storage Group through the acquisition of head company Brightflow Enterprises, subject to conditions precedent customary for a transaction of this nature together with final debt facility approval.
The acquisition will be funded through cash reserves and debt facilities, subject to approval, and is expected to be completed before 1 September 2022.
Fremantle Freight & Storage Group (FFS) will be acquired for $23.6 million (payable upfront and subject to customary adjustments) with a further $7.8 million payable contingent on achieving agreed financial milestones for the period ending 31 July 2023. An additional consideration is payable in the event financial milestones are exceeded, but is not expected to be greater than $3 million.
Silk has the option to half the $7.8 million and 100% of any additional consideration in cash or Silk shares, based on Silk’s 30-day VWAP prior to 31 July 2023.
Silk’s CEO Brendan Boyd said “FFS is a strategically important acquisition and establishes Silk’s Port Logistics capabilities in Perth. This will allow us to extend our elevated customer service offering nationally. FFS is an attractive opportunity, the businesses operating philosophy is highly aligned with Silk’s offering and will deliver operational efficiencies as well as further revenue growth.”
“Silk also gains an exceptional team at FFS, who are the key to their success and will continue to drive significant value for FFS and the broader Silk business”, Mr Boyd said.
Fremantle Freight & Storage Group was established in 2000 and operates across four sites in metropolitan Perth. The company provides wharf cartage, warehousing, quarantine, fumigation and other complementary port-related services.
FFS generates annual revenue in excess of $29 million as well as strong positive earnings and operating cashflow. The acquisition is expected to contribute positively to Silk’s group earnings immediately and be earnings per share accretive from the first full year of ownership, before accounting for any potential synergies and integration costs.
