Sealink’s Transit buy worth up to $700m

Ferry and cruise ship operator SeaLink is tapping shareholders to help fund a deal for private bus firm Transit Systems Group that could be worth up to $700 million.

Sealnk announced on Tuesday it had entered into binding agreements to acquire Australia’s largest private operator of metropolitan public bus services for an enterprise value of $635 million, plus a earn-out component of up to $63 million.

News of the deal comes about 18 months after the Captain Cook Cruises operator itself rejected a $482 million takeover bid from an unnamed party.

The buyout of Transit also involves a management shuffle, with Transit Systems chief executive Clint Feuerherdt to replace SeaLink’s departing chief executive Jeff Ellison.

“Over a long period of time, both SeaLink and Transit Systems Group have developed market leading positions in their respective sectors and I see significant opportunity for the combined group to target integrated multi-modal passenger transport contracts across the public and private sectors,” Mr Feuerherdt said.

SeaLink has a strong hold on tourism and passenger ferry market at a number of popular Australian locations, including Kangaroo Island, Rottnest Island, Fraser Island, Tiwi Islands, and Bruny Island.

Transit operates approximately 3,129 buses and 32 depots across Australia, London and Singapore on behalf of local and regional governments and authorities, with 16 major contracts in Australia, 23 contracts in London and 31 routes under contract in Singapore.

To partly fund the acquisition, SeaLink is raising a total of $154 million through dual placement and entitlement offers.

It will complete the funding by issuing $269 million of SeaLink scrip to the vendors of the Transit System Group and drawing down on new debt facilities.

The deal – unanimously backed by the SeaLink board – remains subject to approval by shareholders, clearance by the Foreign Investment Review Board, and the provision of debt and credit assistance by the Transit Systems Group.

Shares in Sealink were worth $3.91 before being placed in a trading halt on Tuesday, having fallen by 8.0 per cent so far in 2019.

Source link Finance News Australia

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