Singapore Post Limited announced that it has entered into a sale and purchase agreement with Pacific Equity Partners (“PEP”) for the sale of its Australia business, Freight Management Holdings Pty Ltd (“FMH”).
PEP shall acquire the Australia business at an enterprise value of A$1.02 billion (approximately S$897.6 million), which translates into A$775.9 million (approximately S$682.81 million) in cash and generates an expected gain on disposal of approximately S$312.1 million, subject to adjustments determined at the time of Completion and any other further adjustments.
“The Board believes this divestment is the best option for shareholders by crystallising the unrealised value of the business and bringing forward unlocking value for shareholders,” said Simon Israel, Chairman, SingPost.
Pacific Equity Partners Managing Director, David Brown said, “We are thrilled to welcome FMH Group to our portfolio. FMH Group has a stellar track record of growth, a passionate team and a clear and compelling trajectory. We look forward to supporting them to build on their success and facilitate further opportunities.”
SingPost intends to utilise some of the proceeds to repay borrowings, in particular, its Australian Dollar-denominated debt amounting to A$ 362.1 million (approximately S$320.8 million) – as of 30 September 2024 – undertaken for the financing of the acquisition of FMH. The total Australian Dollar-denominated debt of the SingPost Group (including borrowings undertaken by FMH) amounted to A$614.8 million (approximately S$544.9 million) as of 30 September 2024.
The SingPost Board will consider in due course, the payment of a special dividend after taking into account, amongst other things, the repayment of the Australian Dollar-denominated borrowing and future funding needs of the SingPost Group. Further announcements on such a proposed special dividend will be made at an appropriate time.
In July 2023, the Board initiated a strategic review of the SingPost Group’s portfolio of businesses, with a view to enhancing shareholder returns and ensuring that SingPost is appropriately valued. In March 20242, the Board outlined its strategic intentions for the businesses and in line with this, initiated a strategic review specifically for the Australia business3 to formulate optionalities for the Group. Merrill Lynch Markets Australia Pty Limited (“BofA”) was appointed as financial advisor to the Board.
In the course of the strategic review, SingPost received unsolicited interest in the acquisition of FMH, leading to an international competitive bid process conducted by BofA. After evaluating various options, including full and partial divestments, organic and inorganic growth strategies, the Board determined that a full divestment was the best option and a first step towards bringing forward and unlocking value for shareholders.
“Once the transaction is complete, the Board and Management will review and reset the Group’s strategic plan, with a continued focus on shareholder value. We will make an announcement about this at the appropriate time,” said Vincent Phang, Group CEO, SingPost.
The proposed divestment is subject to regulatory approvals such as approvals from the Foreign Investment Review Board of Australia, and SingPost obtaining the requisite approval from shareholders in an extraordinary general meeting of SingPost to be convened.
