Mainfreight managing director Don Braid. Photo / Natalie Slade
Mainfreight's planned purchase of a major European freight firm could boost future earnings by more than a fifth, according to information provided to shareholders yesterday.
On Monday the listed transport operator announced it had entered an agreement to acquire the Wim Bosman Group - a privately owned, Netherlands-based freight business
- for up to $227 million.
A pro forma statement of financial performance was released to Mainfreight investors yesterday, giving a snapshot of how the two businesses would have performed had they been a combined entity in the year to December 31, 2010.
The New Zealand firm earned $45.1 million after tax during the 12 month period, but that would have increased to $52 million if it had owned the European company during that time, Mainfreight said.
However, one analyst said earnings would actually have reached $55.4 million if a non-recurring cost for the acquisition was excluded - a 22 per cent increase.
"A 22 per cent [increase in after tax earnings] is probably above the initial expectations for the deal," said Goldman Sachs analyst Marcus Curley.
"It's a very substantial number."
Mainfreight's share price surged by more than 10 per cent following Monday's announcement to hit a record $8.95 during Tuesday trading.
Shares closed up 28c at $9.10 last night.
"From what we understand today [from the pro forma statement] it looks like a good acquisition," said Curley.
The statement also said the combined businesses would have achieved ebitda (earnings before interest, tax, depreciation and amortisation) of $123 million, on sales of $1.74 billion, last year.
In 2009 the Wim Bosman Group earned 61 per cent of its revenue in the Netherlands, 30 per cent in Belgium and 9 per cent in France, Romania, Poland and other countries, according to the notice given to shareholders.
Mainfreight said the pro forma statement was prepared based on a number of assumptions including an effective tax rate of 30 per cent being applicable and an exchange rate of $1 to €0.536.
No adjustments had been made to take into account the "synergy benefits" that may take place following the acquisition, the company said.
Completion of the purchase is scheduled for April 1, but Mainfreight still has to secure approval from its investors.
A meeting of shareholders is scheduled for next Thursday, but Forsyth Barr analyst Rob Mercer said this week that the firm's shareholders would look favourably on the plan.
Mainfreight already has operations in New Zealand, the United States, Australia and Asia.
