The ongoing mergers and acquisitions of ASX-listed WiseTech Global continues with the acquisition of US rail logistics company Blume Global for $414 million.
The deal comes just three weeks after the Sydney-headquartered freight software giant announced it would acquire US logistics management software startup Envase for US$230 million (A$327 million).
Richard White, the billionaire founder and CEO of WiseTech, also acquired recently delisted data services company Kyckr last month through his personal investment vehicle RealWise KYK AV in a deal worth approximately $43.5 million.
Blume is being acquired from funds managed by Apollo, EQT and other minority shareholders.
Blume has a core capability in direct rail data connectivity in North America, where its customers serve six of the seven Class 1 US railroads. It also expands WiseTech’s presence in onshore logistics, one of the company’s top six development priorities for its product, CargoWise.
The latest purchase comes as part of a joint push into the US logistics market by the Australian logistics management software company.
WiseTechGlobal (ASX:WTC) expects to finance the transaction through a combination of US$134.8 million from existing cash reserves, US$155 million in debt from new facilities and US$124.2 million of new WiseTech Global shares issued to the sellers – a funding mix of 70% cash and 30% WiseTech Global stock.
One-time transaction costs of approximately US$10 million will be funded from existing cash reserves. WiseTech expects to have approximately A$400 million of liquidity from existing cash reserves and undrawn debt facilities upon closing of the deal.
Blume manages intermodal containers and chassis on behalf of 6 of the 7 Class 1 U.S. railroads, ocean carriers, and other suppliers of intermodal equipment, including global freight forwarders and Beneficial Cargo Owners (BCOs).
The company is expected to generate revenue of between $65 million and $70 million in FY24, representing annual growth of 45% to 55%. Before the integration into WiseTech, Blume expects to achieve an EBITDA margin of approximately 10% and break-even cash flow in FY24 by the end of FY24.
Richard White said the Blume deal is another strategically important acquisition following Envase Technologies last month.
“It further expands our capability in one of our top six CargoWise development priorities, integrating rail into our landside logistics offerings in North America, the most complex and largest logistics region in the world,” he said.
“Blume also brings significant new talent, a portfolio of other valuable product capabilities, and further enhances our product development capabilities. This transaction demonstrates WiseTech’s continued investment in its CargoWise ecosystem, improving end-to-end visibility and process efficiency throughout the entire supply chain for our customers.”
Blume CEO Pervinder Johar said, “Joining the WiseTech Global group means increased scale and resources to make logistics processes more productive, flexible, reliable and sustainable with innovative fulfillment and visibility solutions.”
The acquisition is subject to U.S. regulatory approval and is expected to close in April.
White and the WiseTech team will provide more details on the company’s plans and performance on Feb. 22 at the company’s semi-annual earnings briefing.
Shares of WiseTech fell during opening trading on Friday, dropping below $58 to $57.12, but continuing to gain more than 16% year-to-date.