KUALA LUMPUR (Oct 4): Freight Management Holdings Bhd is buying three US-based freight forwarding services companies for a combined US$2.2 million (approximately RM9.2 million), as part of the group's expansion initiatives into selective international markets.
"The US market fits into the group's strategies as it is the world's largest importer and the second largest exporter of merchandise trade and is a major trading partner of countries where the group has a presence," Freight Management said. Currently, the integrated logistics services provider has its presence in Malaysia, Indonesia, Thailand, Vietnam, India, the Philippines, Australia, the United Arab Emirates and the US.
In a bourse filing on Monday, Freight Management said its indirect wholly-owned subsidiary FM Global Logistics Ventures Sdn Bhd has entered into a stock purchase agreement with several independent third parties to acquire the entire issued shares of Inter-Orient Services, Inter-Orient Corp and Noble Shipping Corp (IOS Companies).
"With the acquisition, the group would be able to immediately leverage the existing customer base and resources of IOS Companies, which have an established freight forwarding business and valid customs brokerage licence in the US. The IOS Companies will also serve as a gateway to the vast US market via its base in Los Angeles. As the group develops its presence in the US, the group will also explore other logistics-related opportunities such as e-commerce fulfilment services," Freight Management added.
Freight Management said it will fund the acquisition through internal funds and/or bank borrowings.
"The acquisition is expected to contribute positively to the group's earnings per share and net assets per share for the financial year ending June 30, 2022. The acquisition will result in an increase in Freight Management's gearing should the company decide that the purchase consideration be satisfied by bank borrowings," it noted.
The acquisition is expected to be completed within 30 days from Monday.
Shares of Freight Management closed down 1.28% or one sen to 77 sen, bringing a market capitalisation of RM430 million.