Freightways Acquires New Business in Australia

Freightways Acquires New Business in Australia

Freightways Limited (Freightways) announces that it has purchased the Australian information management company, Databank Technologies Pty Ltd (DataBank).

The acquisition is effective from 1 July 2006 and payment of the purchase price will be staged over two years. Initial payments totalling around A$18 million will be made during the first few weeks of ownership. Two subsequent payments of up to a maximum of approximately A$6 million each, dependent on achievement of agreed annual earnings performance, will be made after the finalisation of the results for the years ended 30 June 2007 and 2008, respectively.

For the year ended 30 June 2007, DataBank is expected to contribute annualised EBITDA of approximately A$2.7 million. The expected total purchase consideration represents an effective multiple, calculated over the two-year period of the earn-out and based upon maximum earn-out achievement, of 7 times EBITDA. This acquisition is expected to be EPS (earnings per share) positive immediately for Freightways.

DataBank is the No.2 operator by market share in the Data Storage niche of the Information Management sector in Australia and according to Freightways Managing Director, Dean Bracewell “is a successful business with an operating culture similar to that of Freightways”.

“This acquisition in Australia is a well considered and important step in the development and growth of Freightways,” says Mr Bracewell “Although small, relative to the size of Freightways, we expect DataBank will be a catalyst for future offshore growth in niche markets where we have proven capability.”

The acquisition is seen as a natural extension for Freightways as a leading supplier of offsite Data Storage services in New Zealand through its ‘Data Security Services’ business. It is one of three Freightways brands operating in the Information Management sector in New Zealand. Other Information Management services currently provided by Freightways include document storage through ‘Archive Security’ and the destruction and recycling of documents through ‘Document Destruction Services’.

Freightways operates in three distinct markets being the express package, business mail and information management markets. The acquisition of this business is consistent with Freightways’ strategy to develop incremental growth opportunities that complement its existing operations.

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