M&A radar: SATS + WFS – just for the sake of clarity...
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China’s HNA group has continued its transport and logistics acquisition spree after agreeing to buy the cool chain logistics operations of Australia’s Automotive Holdings Group (AHG) for A$400m (US$305m).
AHG’s refrigerated logistics brands comprise Rand, Harris, Scott’s road and rail transport and warehouse operations, and JAT Transport, and HNA is set to acquire firms through its Australian subsidiary CC Logistics.
It will pay A$280m in cash and assume the remaining A$120m in finance lease liabilities, and existing chief executive Stephen Cleary will remain in his role with the current management team.
The deal is expected to close in the first half of next year if it receives competition clearance and the consent of its creditors.
Although AHG had not officially put the unit up for sale, it did begin a restructuring programme at the beginning of the year to improve profitability.
AHG chairman David Griffiths explained: “AHG has previously announced it would explore all opportunities to maximise shareholder value from the Refrigerated Logistics business. Although the restructuring initiatives are delivering a significantly improved financial performance, the sale provides AHG with the opportunity to realise a certain value for shareholders that reflects this continuing improvement.
“The sale also provides AHG with both the resources for further growth in our automotive operations and scope for capital management.”
Last year the unit delivered an EBITDA of A$7.4m, which is forecast to rise some 46% this year to A$10.8m.
The deal represents another step in China’s focus on acquiring agricultural assets in Australia, and Australian food imports into China have soared in recent years, coinciding with the growing wealth of its expanding middle class.
According to recent study from Transport Intelligence, Cold Chain Logistics 2017, China’s cold chain industry doubled in value between 2010 and 2015 to amount to Rmb180bn (US$27.3bn), and is set to grow to Rmb400bn by 2020, and AHG executives indicated that HNA’s new acquisition was likely to be part of that.
AHG chief executive and managing director John McConnell said: “HNA has indicated a commitment to growing and continuing to invest in the refrigerated logistics sector, both internationally and in Australia.
“As an experienced participant in the logistics sector, HNA will continue to deliver quality services to customers and we strongly believe that the business will have a very positive future under its new owners.”