Wridgeways, the listed furniture removal company founded in Melbourne 118 years ago, has been acquired by a Hong Kong-based logistics firm in a $93.1 million deal, as signs grow that the M&A activity in the SME sector is heating up.
In another deal, Melbourne-based plumbing group Schultz Plumbing has been acquired by Select Solutions, a division of energy giant SP Ausnet, for an undisclosed amount.
The Wridgeways deal, which is in the form of a scheme arrangement, comes after a period during which the iconic removals company has searched hard for its own acquisition in Asia.
Indeed, one of Wridgeways targets in Asia was Hong-King based logistics firm Santa Fe Holdings, which is itself a division of Denmark’s East Asiatic Co. But the hunted turned hunter and made an offer that managing director Des Stickland says is too good to refuse.
“I told them you can’t afford us, you’ll need deep pockets and, bugger me, they do,” Stickland told The Australian.
While Wridgeways has a strong brand in Australia – built up through a focus on the corporate end of the removals market – it’s lack of an international presence has restructured growth in Australia’s crowded logistics market.
The offer is priced at $2.80 a share, which is a reasonable premium to the $2.45 share price the stock was trading at in late August.
The deal is priced at 9.3 times 2009-10 EBITDA. Wridgeways posted a 7.1% drop in net profit in during the period to $6.2 million, with revenue down 6.4% to $116 million.
Wridgeways, which will need court and shareholder approval to implement the takeover deal, says Santa Fe does intends to keep all staff and will not make material changes to the business.
“With global expertise and scale, Santa Fe will provide Wridgeways’ customers and employees with substantive benefits. Santa Fe is well positioned to support Wridgeways for its next phase of growth,” chairman Bryan Weir said in a statement.
The acquisition of family business Schultz Plumbing by Select Solutions represents another example of the high level of interest in local businesses from Asia – Select Solutions parent company, SP Ausnet, is owned by Asian energy giant Singapore Power.
Both deals suggest merger and acquisition activity at the middle level of the market is starting to heat up as global conditions improve.
Asian groups are particularly interested in Australia due to the strong resources sector, but these deals shows Asian buyers are taking a much wider view of the economy.
James was the editor and publisher of SmartCompany and LeadingCompany for five years. He is now the Australian Financial Review‘s companies & markets editor, and a former BRW editor.
Comments