AHG announces acquisitions worth $184 million

AHG announced the acquisition of two new businesses in a total transaction value of $184 million to expand its refrigerated logistics and automotive sales businesses.

This morning the company announced it would acquire Sydney-based Scott’s Refrigerated Freightways (SRF) for approximately $116 million, along with purchasing the remaining shares in JAT Refrigerated Road Services, a Cairns-based haulage company.

AHG says the acquisitions will strengthen its position as the largest provider of cold storage transport and storage services in Australia.

“The acquisition will expand AHG’s customer base and product knowledge and diversify AHG’s exposure to seasonal fresh produce peaks, enabling more efficient use of infrastructure throughout the year,” the company said.

SRF and JAT are expected to generate full-year 2014 revenues of $237 million and EBITDA of approximately $25 million.

AHG said it expects to achieve cost synergies of approximately $4 million by the end of 2016 as a result of rationalizing its cold storage facilities in Perth, Adelaide and Melbourne.

Managing director Bronte Howson said the acquisition of SRF and JAT would create Australia’s largest temperature-controlled carrier.

“SRF and JAT are trusted service providers with strong relationships that will diversify our existing business and expand our customer service offerings,” he said.

The $116 purchase price includes $71 million in cash, $15 million in AHG stock and the assumption of a finance lease of approximately $30 million.

AHG also announced today plans to acquire Bradstreet Motor Group for $68 million in cash.

Bradstreet comprises 13 car showrooms in and around Newcastle, representing seven car manufacturers. For the full year 2013, it generated revenues of $449 million and a pre-tax net profit of $14 million.

Mr Howson described the acquisition as a strategic addition to the company’s dealer network in New South Wales.

“Sellers operate on well-maintained properties under long-term lease agreements and do not require significant investment outlays,” he said.

The addition of Bradstreet Group dealers will increase AHG’s network to 169 franchises in 96 dealer locations across Australia and New Zealand.

The acquisition will be partially financed through the issuance of $115 million of stock at a price of $3.49 per share and a $10 million share purchase plan.

AHG also announced that negotiations to sell Covs retail stores in Washington state continue, with no guarantee that a deal will be completed.

The company said it has secured an additional $45 million in debt from its existing lenders as it continues negotiations with interested parties and pursues further strategic initiatives and possible asset sales.

AHG said it would maintain net debt of $189 million after the acquisitions and capital raises, representing a leverage ratio of 17.1%.

The company’s shares rose six cents, or 1.67 percent, to $3.60 at 8.25.