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Mainfreight managing director Don Braid is confident shareholders will back the company's latest overseas expansion plan.
The listed transportation operator yesterday announced an agreement to buy the Wim Bosman Group for up to $227 million.
Shares yesterday closed up 47c, or 5.8 per cent, at $8.59.
Mainfreight says the European firm is one of the largest privately owned transport and logistics outfits in the Netherlands and Belgium.
Completion of the acquisition is scheduled for April 1, but Mainfreight first has to gain approval from its shareholders by special resolution.
A meeting of investors is scheduled for March 24.
"I think that when the shareholders receive the notice of meeting they will be able to see why this a good transaction for Mainfreight and for them as shareholders of Mainfreight," said Braid. "As far as the directors are concerned we would unanimously recommend that they vote in favour of the resolution."
Forsyth Barr analyst Rob Mercer said shareholders would look favourably on the acquisition, remembering how well Mainfreight had managed its overseas expansions into Asia, North America and Australia.
"[Mainfreight] has a really good handle on what their long-term vision is - they see themselves as a global freight and logistics business," Mercer said.
He said the acquisition of the European firm was appropriately priced and would be "a good strategic fit" for the Kiwi company.
In addition to its Dutch and Belgian operations, the Wim Bosman Group has branches in France, Romania, Poland and Russia.
Braid said the group was a large, well-run and profitable operation.
"[The acquisition] gives Mainfreight the opportunity to establish a footprint in Europe for its future expansion plans," Braid said, adding the firm had no immediate plans to re-brand the European operations.
The initial purchase price is set at €110 million ($208 million), but a further €10 million will have to be paid if the Wim Bosman Group achieves ebitda (earnings before interest, tax, depreciation and amortisation) of at least €20 million for the year ended December 31, 2011.
The Netherlands-based company achieved an ebitda of €19.4 million on revenue of around €240 million in 2010.
Mainfreight plans to finance the purchase through bank debt, which will bring its gearing ratio of net debt to net debt plus equity up to 48 per cent from its pre-acquisition level of 17.5 per cent.
The company said it had refinanced its existing bank facilities, which allowed for borrowings of up to $415 million, based on current exchange rates.
"Mainfreight has elected to debt fund the acquisition in preference to an equity raising due to significant balance sheet capacity and the lower cost of debt relative to the cost of equity," the firm said in a statement.
Auckland-based Mainfreight has been expanding globally for more than 20 years.
Braid said the firm first went offshore in 1989 when it entered the Australian market, greatly expanding its presence in that country through an acquisition in 1998.
Mainfreight established itself in North America in 1999, he said, and in Asia in 2000.
"We've learnt a lot in our time, but we haven't been in Europe and obviously there will be new things to learn," Braid said.
He said Mainfreight's Mark Newman, who currently runs the firm's New Zealand domestic operation, would move to the Netherlands to run the new business.
Braid said establishing a presence in Latin America was still on the cards.
"There's no doubt we'll have a small operation in South America at some point in time in the near future."
WIM BOSMAN GROUP
* Transport and logistics company.
* Headquartered in 's-Heerenberg, a Dutch city on the Netherlands-German border.
* 14 branches in the Netherlands, Belgium, France, Romania, Poland and Russia.
* More than 1000 transport units and more than 275,000sq m of warehouse and cross-docking facilities.
* About 1414 staff.
* Earnings of €19.4 million on revenue of around €240 million in the year ended December 31, 2010.