Mainfreight in $200m deal

“The acquisition is a strong strategic fit for Mainfreight..." says Managing Director Don Braid.

Mainfreight has entered into a NZ$205m sale and purchase agreement to purchase the Netherlands‐based Wim Bosman Group.

The Wim Bosman Group is one of the largest privately‐owned, integrated transport and logistics providers in the Netherlands and Belgium with 14 branches across six European countries, with more than 1,000 transport units, more than 275,000m² of warehouse and cross docking facilities and approximately 1,414 team members.

The Group provides transportation and logistics services across Europe utilizing road, sea and air transportation. Third party warehousing services are an attractive feature of the supply chain activities offered to its customers.

“The acquisition is a strong strategic fit for Mainfreight and will provide an excellent platform for Mainfreight to expand its business and service offering globally,” says Mainfreight managing director Don Braid.

“Mainfreight’s presence in the European community will provide increasing services and opportunities to its existing and future customers from New Zealand, Australia, Asia and the USA.

“The initial purchase price for the Wim Bosman Group is €11m (approximately NZ$205m). A further earn out payment of up to €10m will be payable if the Wim Bosman Group achieves EBITDA of at least €20m  for the year ending 31 December 2011, giving a maximum purchase price of €120m.

EBITDA for the Wim Bosman Group for the year ended December 2010 was €19.4m (unaudited) on sales revenues of approximately €240m

Mainfreight expects that the transaction will be accretive to its earnings per share.

Funding the Acquisition – New Loan Facilities

The acquisition of the Wim Bosman Group will be funded by bank debt. In addition to raising the additional debt required to fund the acquisition, Mainfreight has taken the opportunity to refinance its existing bank debt facilities on more favourable terms by entering into new loan facilities.

These new facilities are five year multi‐currency facilities which allow for borrowings up to approximately NZ$415m (based on current exchange rates).

Mainfreight has elected to debt fund the acquisition in preference to an equity‐raising due to significant balance sheet capacity and the lower cost of debt relative to the cost of equity.

Following the acquisition, Mainfreight’s gearing ratio of net debt to net debt plus equity is expected to be approximately 48%. The current gearing ratio pre‐acquisition is approximately 17.5%.

“Cash flow generation from the combined entity, post acquisition, will be more than sufficient to service interest costs and debt reduction,” says Braid.

The new funding arrangements will allow for expansion under more favourable terms and covenants, with additional headroom for future capital requirements.

Mainfreight shareholder approval will be required by way of a Special Resolution. A special meeting of Mainfreight shareholders is scheduled to be held on 24 March 2011.

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