A major strategic acquisition valued at over $30 million by Silk Logistics is expected to elevate its expanding national offering.
The binding agreement to acquire the Fremantle Freight & Storage Group through the acquisition of head company Brightflow Enterprises was announced earlier today.
The deal is subject to conditions precedent customary for a transaction of this nature together with final debt facility approval.
Established in 2000, Fremantle Freight & Storage (FFS) operates across four sites in metropolitan Perth and provides wharf cartage, warehousing, quarantine, fumigation and other complementary port-related services.
The acquisition adds immediate scale to Silk’s WA footprint, consistent with Silk’s strategy to grow its ability to provide reliable Port Logistics solutions nationally.
Further, the acquisition is expected to unlock demand from Silk’s existing blue chip customer base as well as other potential cross-selling opportunities.
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.
“FFS is a strategically important acquisition and establishes Silk’s Port Logistics capabilities in Perth,” said Brendan Boyd, Silk CEO.
“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,” he said.
“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.”
The acquisition of FFS will be funded through cash reserves and debt facilities (subject to approval).
The acquisition is expected to complete before 1 September 2022, subject to customary closing conditions, including certain third-party consents.
The acquisition price consists of $23.6 million payable upfront (subject to customary adjustments) with a further $7.8 million payable contingent on achieving agreed financial milestones for the period ending 31 July 2023.
Additional consideration is payable in the event these milestones are exceeded, based on a percentage of the outperformance, but is not expected to be greater than $3.0 million.
Silk has the option to pay 50 per cent of the $7.8 million and 100 per cent of any additional consideration in cash or Silk shares, based on Silk’s 30-day VWAP prior to 31 July 2023.