Courier and data management company Freightways is moving into refrigerated trucking.
Freightways is buying Big Chill, a refrigerated trucking firm that has more than 200 vehicles in New Zealand. Photo: Supplied
The company is to acquire Big Chill, which operates more than 200 vehicles delivering chilled and frozen produce around the country.
"The acquisition of Big Chill represents a highly compelling transaction and will provide Freightways with both short and long term growth opportunities, while further diversifying its earnings base," Freightways chief executive, Mark Troughear, said.
It will pay an initial $117 million, representing 80 percent of Big Chill's current value.
The final 20 percent instalment will be paid in 2022, with the price based on Big Chill's earnings and value at that date. The current price implies a value of about $150m.
Freightways will pay for the acquisition by debt, and it will lift its debt-to-earnings level temporarily.
However, it said the deal made sense because Big Chill is an established operator with market share in a sector of the market that should give it protection against economic cycles and diversity from its current courier businesses.
It was also expected to boost earnings immediately, and offer efficiencies in operational costs.
The deal needs approval by the Overseas Investment Office and is expected to be settled around the middle of next year.
Freightways reported a marginal lift in profit to $63.4 million in the year to June, boosted by an insurance payout for earthquake damaged structures, while its revenue rose 6 percent.
Freightways brands include New Zealand Couriers, Post Haste Couriers, and DX Mail.