Freightways buys Australian legal information firm LitSupport for up to A$30M
Freightways, the listed courier and data management company, will spend up to A$30 million on Australian information management firm LitSupport.
The Auckland-based company paid A$17.1 million upfront, and will add potential earnouts of up to A$12.1 million based on LitSupport's 2017 performance, in a deal that's expected to generate A$17 million of annual revenue and A$3.8 million in operating profit, Freightways said in a statement. The acquisition beefs up Freightways' offering to include electronic and physical evidence management services to the legal industry in Sydney, Melbourne, Brisbane and Perth, and will immediately add to earnings per share, it said.
"LitSupport's suite of services complements those of TIMG (The Information Management Group) and positions TIMG higher on the service chain of the legal industry, in particular, but also for government and corporate Australia," Freightways said. "This acquisition is consistent with Freightways' strategy to develop growth opportunities that complement its existing capabilities."
The multi brand company, whose businesses include New Zealand Couriers, Post Haste Couriers and DX Mail, has been expanding its information management interests, buying document management companies Docushred and Document Destruction Services, as well as Advance Security Destruction Services and Document & Data Storage Management in Australia.
In October, Freightways said it was on track to lift 2015 earnings after reporting a 17 percent increase in first-quarter sales, driven by increased demand and a bigger market share from its courier business.
Its information management division recorded a 14 percent increase in sales to $28.8 million and a 23 percent gain in earnings before interest, tax, depreciation and amortisation to $5.9 million. The Ebita margin widened to 20.5 percent from 19.1 percent..
The shares last traded at $5.70, and have gained 21 percent this year. The stock is rated an average 'hold' based on five analyst recommendations compiled by Reuters, with a median price target of $5.60.
