ASX-listed Silk Logistics Holdings has entered into a binding agreement to acquire Melbourne-based Secon Freight Logistics, which started as a family business founded by Jim Seide and Maurie Considine in 1969.
According to a recent ASX announcement, the acquisition price consists of $30 million payable upfront in cash and $5 million in Silk shares.
There is a further undisclosed deferred earn-out payment (payable in cash) determined with reference to 5x normalised annual earnings before interest, taxes, depreciation and amortisation.
The transaction is expected to be complete by September 30, subject to the satisfaction of customary conditions, including consents to change of control from major customers and landlords.
Current CEO Daniel Considine, and other members of the Considine family will continue in their existing roles following the deal being finalised.
Secon operates with approximately 160 staff across two strategically located sites in Victoria and provides specialised port logistics, bulk logistics, warehouse and distribution services.
It generates annual revenue of over $65 million, as well as strong margins and operating cashflow, added the ASX acquisition statement.
“The acquisition of Secon adds immediate scale to Silk’s Victorian footprint, consistent with our strategy as an integrated ‘port-to-door’ provider,” said Silk CEO Brendan Boyd.
“Further, this acquisition provides Silk with a significant platform in national bulk logistics, unlocking demand from our existing blue chip customer base as well as other potential cross-selling opportunities.”
This time last year, Silk entered into an agreement to buy WA-based Fremantle Freight and Storage Group for $23.6 million plus a further $7.8 million contingent on achieving financial milestones over the next year.
It was the second major purchase for Silk Logistics in 2022 after buying Victoria-based contract logistics service provider, 101Warehousing for $10.5 million.