The wide-moat third-party logistics behemoth struck an agreement to acquire privately held air and ocean forwarder APC Logistics.
Wide-moat third-party logistics behemoth C.H. Robinson
struck an agreement to acquire privately held air and ocean forwarder APC Logistics for roughly $225 million in cash. The deal will likely close this quarter, assuming regulatory approval. The company will fund the transaction with existing cash and its revolving credit facility, and expects it to be EPS accretive in the first year. Based in Melbourne, Australia, APC has 300 employees and runs nine offices--seven in Australia and two in New Zealand. In its most recent fiscal year (ended June 30, 2016), it posted about $250 million in gross revenue. In terms of net revenue, Robinson's global forwarding and customs brokerage businesses posted $347 million in 2015, and APC will probably add 18%-20% to that run rate depending on its gross margin performance.
Matthew Young, CFA, is an equity analyst for Morningstar.
Further financial details were limited, but running potential APC performance numbers through our model, our initial take is that the cash flow impact should prove modestly accretive to shareholder value, and we expect to boost our $67 fair value estimate by roughly 3%; the shares are trading in fairly valued territory. In general, we have high confidence in Robinson’s best-in-class operational acumen, and previous deals in its global forwarding segment have met with success (including integration efforts), namely its 2012 acquisition of Phoenix International. We expect additional detail when the firm reports third-quarter results in late October.
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