AHG swoops on Harris Refrigerated in a $32 million deal tipped to help its existing operation, Rand Transport
By Rob McKay | May 12, 2011
Automotive Holdings Group will add about 80 prime movers and 150 trailers to its wider refrigerated fleet with the takeover, announced today, of Harris Refrigerated Transport.
The $32 million deal, which will also include 16 rigids, should be completed by June next year and comprises $17.2 million in cash and the picking up of $14.6 million in hire-purchase and mortgage burdens.
It will be subject to conditions, “including the grant of certain regulatory licensing approvals”.
AHG expects to gain synergies and extra east-west services for its existing operation, Rand Transport, a refrigerated road and rail transport, cold storage and distribution services provider.
AHG Managing Director Bronte Howson says the acquisition will enhance Rand by offering increased service capabilities for existing customers and a complementary geographic footprint and customer base.
He added that Harris’s “expertise in road transport will complement Rand’s existing rail capacity and allow it to transport fresh produce in addition to frozen and chilled product.”
“An approximate $3 million reduction in the operating cost base is targeted to be achieved by FY2013 as AHG rationalises premises and duplicated functions, achieves scale benefits and gains a complementary geographic footprint from transport opportunities”.
“Approximately $2 million in one-off costs will be incurred over FY2012 and FY2013 to achieve these cost savings.”
Privately owned, Harris has a presence in all mainland states, mostly in capital cities, and services the six depots from its Adelaide base.
It put Harris’s annual revenues at about $80 million.
Harris Transport Managing Director Michael Hill says the deal will be a boost for both firms.
“This acquisition is vitally important in securing our future and allowing us to grow our business into a truly national refrigerated road and rail network,” Hill adds.
“We’re particularly delighted that the Harris Refrigerated Transport name will continue to operate and we are looking forward to using the efficiencies gained by the consolidation of both companies to further improve our quality of service to our customers.”
Meanwhile, AHG has also bought Coventry Group’s automotive parts supply and distribution business for $29 million.
With 26 branches across Perth and regional Western Australia and an exposure to the WA mining sector, along with commercial automotive repair, the purchase will bolster AHG’s AMCAP subsidiary.
It recorded sales last financial year of $124 million.
AHG will seek $82.9 million from the market to fund both deals.