SINGAPORE: Singapore Post (SingPost) has signed a share purchase agreement to sell its Australian business for an enterprise value of A$1 billion (about S$874.77 million) to Pacific Equity Partners, an Australian private equity firm, the national postal service provider said on Monday, Dec 2.
The sale follows a strategic review of SingPost’s Australian operations, which include Freight Management Holdings, earlier this year.
According to The Business Times, SingPost will receive A$775.9 million (about S$678.73 million) in cash and expects to make a gain of about S$312.1 million from the sale, with adjustments to be made when the deal is completed.
The business being sold covers a range of services in Australia, including fourth-party logistics and third-party logistics solutions such as transportation and distribution, last-mile courier delivery, and warehousing.
As of Sept 30, 2024, the Australian business had a net asset value of S$384.7 million. Its revenue for the first half of the financial year rose by 44.1% to S$574.8 million, and operating profit increased by 30.2% to S$30.4 million.
SingPost expects the sale proceeds to improve its liquidity and strengthen its balance sheet.
The company plans to use part of the proceeds to repay its borrowings, including A$362.1 million (about S$316.75 million) in Australian dollar-denominated debt as of Sept 30, 2024.
The total Australian dollar-denominated debt was A$614.8 million (about S$537.81 million) at the end of September.
The remaining proceeds will be used for future investments in business growth, including investments in existing or new businesses, assets, and other opportunities, according to the company.
The company also mentioned it would consider issuing a special dividend after clearing its debt and assessing future funding needs.
SingPost chairman Simon Israel said, “The board believes this divestment is the best option for shareholders by crystallising the unrealised value of the business and bringing forward unlocked value for shareholders.”
Group chief executive Vincent Phang added that the company would review and reset its strategic plans after the sale, focusing on shareholder value.
If the deal is completed by March 31, 2024, SingPost’s net tangible asset value per share will rise to S$0.689 from S$0.349. Earnings per share would increase to S$0.162 from S$0.035 if the transaction were completed on April 1, 2023.
The divestment is expected to close by the end of March 2025. After the sale, SingPost’s Australian business, including Freight Management Holdings, will no longer be part of the company.
SingPost will hold an extraordinary general meeting to seek approval from its shareholders. The sale also needs approval from Australia’s Foreign Investment Review Board. On Friday, SingPost’s shares closed flat at S$0.58. /TISG
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