SINGAPORE Post (SingPost) has entered into a share purchase agreement to divest its Australian business at an enterprise value of A$1 billion (S$870 million).
SingPost will receive actual cash proceeds of A$775.9 million and generate a gain on disposal of about S$312.1 million, subject to adjustments determined at the time the deal is completed.
The buyer is Pacific Equity Partners, an Australia-headquartered private equity fund, said the national postal service provider on Monday (Dec 2).
The deal comes after a strategic review of SingPost’s Australia business, Freight Management Holdings, earlier this year. The review sought to explore strategic options that would enhance business value and maximise shareholder value, said SingPost.
The company’s Australia segment includes fourth-party logistics services, third-party logistics solutions including transportation and distribution, and last-mile courier delivery, as well as warehousing services.
The net asset value of the company’s Australia segment stood at about S$384.7 million as at Sep 30, 2024. Revenue for the business rose 44.1 per cent on the year to S$574.8 million for the first half ended September. Operating profit increased 30.2 per cent on the year to S$30.4 million.
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Use of proceeds
SingPost believes that proceeds from the proposed disposal will reinforce the group’s liquidity and strengthen its balance sheet.
It intends to use some of the gross proceeds to repay its borrowings, particularly its Australian dollar-denominated debt amounting to A$362.1 million as at Sep 30, 2024. SingPost’s total Australian dollar-denominated debt stood to A$614.8 million as at end-September.
Additionally, the group also said it will consider issuing a special dividend, after repaying its debt and considering future funding needs of SingPost.
The rest of the proceeds will be retained by SIngPost for future growth opportunities to invest in existing and/or new businesses, assets and investment opportunities, said the group.
Simon Israel, chairman of SingPost, 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.”
Upon completion of the sale, SingPost will “review and reset” its strategic plan, with a “continued focus on shareholder value”, said group chief executive Vincent Phang.
Assuming that the deal was completed on Mar 31, 2024, the net tangible asset per SingPost share would increase to S$0.689 from S$0.349.
Earnings per share would have been S$0.162, up from S$0.035, if the transaction was completed on Apr 1, 2023.
The divestment is expected to take place by the end of March 2025. Following the completion, SingPost Australia Investments and its subsidiaries, including Freight Management Holdings, will no longer be part of the SingPost group.
SingPost will convene an extraordinary general meeting to obtain shareholders’ approval for the transaction. It will also need to obtain approval from Australia’s Foreign Investment Review Board for the deal to go through.
Shares of SingPost ended last Friday flat at S$0.58.
“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.”
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SingPost chairman Simon Israel
