Private sales make early mark after quiet 2011

BUNBURY’S Giacci family has sold its trucking and bulk haulage business Giacci Group to listed company Qube Logistics for $119 million, marking yet another trade sale of a major Western Australian private business.

The deal came just two weeks after Warren Buffet-backed Canadian company Sterling Crane acquired Freo Group and its Queensland subsidiary, Global Crane, in a deal likely to be worth about $160 million.

The big moves early in 2012 show signs of life in a market that was relatively quiet last year.

The biggest private trade sales in 2011 were linked to two significant private business failures – those of Rick Stowe’s Griffin Group and Pankaj Oswal’s Burrup Fertilisers. Kansai Electric Power and Sumitomo Corporation conditionally agreed to buy Griffin’s power stations from the receivers for $1.2 billion, while Lanco Infratech paid $750 million for the coal mining operations.

Yara International and Apache Energy have bought the Oswals’ controlling stake in Burrup Fertilisers for $420 million.

In another deal last year, the Cardacci family’s CFC Group bought VDM’s Cape Crushing and Contracting subsidiary for $53 million, adding that to its Centurion transport business, JCB construction equipment distributorship and Underground Services infrastructure business.

CFC is now one of the state’s biggest private companies with annual revenue of $300 million.

The sales early this year are more reflective of deals done in 2007, when companies such as Kingston Bridge Engineering sold for $100 million (to Crane Group) and VDM was on the acquisitive side of the transaction ledger, spending $98 million in four purchases; among these was the $45 million it paid for Malavoca.

Two years earlier, Coates Hire bought Allied Equipment for nearly $130 million.

On the private equity front this year, Geraldton company Bhagwan Marine has gained financial backing from Catalyst Investment Managers, which has taken a stake of around 40 per cent for an undisclosed sum.

Private equity was also active in WA last year. Archer Capital paid $450 million for Quick Service Restaurant Holdings, owner of fast food chains Chicken Treat and Red Rooster. On the opposite side of the coin, private equity investor Gresham was foiled in its plan to exit mining services player Barminco via an IPO.

Wellard Group also sold an $83 million stake in the sprawling agribusiness to UK banking giant Standard Chartered to fund international expansion.

Details about the Giacci deal are sketchy at this stage, though the purchase price – an enterprise value of almost $150 million – suggest the company’s earnings before interest and tax were up around the $30 million mark.

The Giacci family will be paid about $100 million next month, when the deal settles, with $18 million deferred for two years and subject to the company’s future earnings. There is a scrip component amounting to $20 million.

Under the agreement, Qube will assume net debt of about $26.6 million.

The Giacci operation began with one truck in 1959 and has grown to become a business employing over 350 people managing more than 17 million tonnes of material per year.

Its core business was built around WA’s mining industry, specifically in transporting minerals from the state’s mines to ports for exporting.

Its focus grew to taking full responsibility of the entire ‘closed-loop supply chain’ encompassing road, rail, port and shipping of materials.

Qube was initially listed in the ASX as an investment fund in 2007, but under the leadership of chairman Chris Corrigan became the logistics company it is today in September 2011.

The value of the Giacci deal is likely to be similar to Freo Group sale earlier in February.

Owned by the Canci family, which established Freo Group in 1974, the group’s EBITDA was $31.8 million in the 2011 financial year, up from $21.1 million in the previous year. 

The $160 million price tag is estimated from a multiple of five times EDITDA.