AHG has announced the acquisition of two new businesses in deals collectively worth $184 million to expand its refrigerated logistics and car dealership divisions.
The company announced this morning it would acquire Sydney-based Scott's Refrigerated Freightways (SRF) for about $116 million, along with the purchase of the remaining interests in JAT Refrigerated Road Services, a transport company based in Cairns.
AHG said the acquisitions would consolidate its position as the largest provider of cold transport and storage in Australia.
"The acquisition will expand AHG's customer base and product expertise and will diversify AHG's exposure to seasonal peaks in fresh produce, allowing for more efficient use of infrastructure across the year," the company said.
SRF and JAT are expected to generate full-year 2014 revenue of $237 million and EBITDA of about $25 million.
AHG said it expected to realise about $4 million in cost synergies by the end of 2016 from rationalisation of its cold storage facilities in Perth, Adelaide and Melbourne.
Managing director Bronte Howson said the acquisition of SRF and JAT would create the largest temperature-controlled carrier in Australia.
"SRF and JAT are trusted service providers with strong relationships that will diversify our existing business and expand our customer service offering," he said.
The $116 purchase price comprises $71 million in cash, $15 million in AHG shares and the assumption of about $30 million in finance leases.
AHG also announced today plans to acquire the Bradstreet Motor Group for $68 million in cash.
Bradstreet comprises 13 car dealerships in and around Newcastle representing seven car manufacturers. It generated full-year 2013 revenue of $449 million for net profit before tax of $14 million.
Mr Howson described the acquisition as a strategic addition to the company's NSW dealership network.
"The dealerships operate from well maintained properties on long-term leases and require no significant capital expenditure," he said.
The addition of the Bradstreet Group dealerships would take AHG's network to 169 franchises at 96 dealership locations across Australia and New Zealand.
The acquisitions will be partly paid for by a $115 million placement priced at $3.49 a share and a $10 million share purchase plan.
AHG also announced negotiations for the sale of its Covs retail stores in WA were continuing, with no guarantees that a deal would be done.
The company said it had secured $45 million in additional debt from its existing lenders while it continued to negotiate with interested parties and pursue further strategic initiatives and possible asset sales.
AHG said after the acquisitions and capital raisings, it would hold net debt of $189 million representing a gearing ration of 17.1 per cent.
Shares in the company were up six cents, or 1.67 per cent, to $3.60 at 8.25am.