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Freightways Acquires DataBank |
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Tuesday, 06 May 2008 06:43 |
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Freightways
Limited (Freightways) announces that it has purchased the Australian
information management company, Databank Technologies Pty Ltd
(DataBank), effective 1 July 2006.
Payment
of the purchase price is staged over two years. Initial payments
totalling approximately A$18 million will be made during the first few
weeks of ownership. Two subsequent payments of up to a maximum of
approximately A$6 million each are expected to become payable after
finalisation of the results for the years ended 30 June 2007 and 2008,
respectively, but only if agreed annual earnings performance has been
achieved in those years.
EBITDA
in the first year of FRE ownership is anticipated to be A$2.7 million.
The expected total purchase consideration represents an effective
multiple, calculated over the two-year period of the earn-out and based
upon maximum earn-out achievement, of 7 times EBITDA.
The
structure and timing of the purchase price payments are expected to
result in this acquisition being immediately EPS (earnings per share)
positive for Freightways.
Key features of this acquisition are:
-
DataBank is the number two operator by market share in the offsite Data
Storage niche of the Information Management Industry in Australia;
- Offsite storage of data remains an underdeveloped and growing niche of the broader Information Management Industry;
- DataBank
is a successful business with an operating culture similar to that of
Freightways’ existing New Zealand information management businesses;
- The
founders of DataBank have been retained to assist DataBank senior
management for a two-year period as part of the earn-out structure of
this acquisition;
- The founders’ interests are aligned with FRE shareholders’ interests by virtue of the earn-out structure;
- DataBank
has an experienced and very capable management team who are expected to
complement and add value to Freightways’ existing management team;
- Although
a small acquisition relative to the size of Freightways, it is expected
that DataBank will be a catalyst for further offshore growth in niches
where Freightways has proven capability; and
- This
acquisition is a natural extension for Freightways as a leading
supplier of offsite Data Storage services in New Zealand through its
‘Data Security Services’ business. Data Security Services is one of
three Freightways brands operating within the Information Management
Industry in New Zealand. Information Management services currently
provided by Freightways also includes document storage through its
‘Archive Security’ business and the destruction and recycling of
documents through ‘Document Destruction Services.’
This
acquisition in Australia is a well considered and important step in the
development and growth of Freightways. It diversifies Freightways’
interests both geographically and also deeper into the Information
Management market where it has proven experience. Freightways’ existing
Information Management businesses and the newly acquired DataBank are
experiencing strong organic growth. In addition, it is expected that
the acquisition of DataBank will in time create the opportunity to
develop further growth initiatives within Australasia.
Freightways
operates in three distinct markets being the express package,
information management and business mail markets. The acquisition of
DataBank is consistent with Freightways’ strategy to develop
incremental growth opportunities that complement its existing
operations.
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