AHG selling trucking division?

Refrigerated transport and logistics arm said to be of interest to private equity

AHG selling trucking division?
Purchase interest has been expressed AHG’s refrigerated transport business, including Rand.


The drums are pounding regarding the possible sale of Automotive Holdings Group’s (AHG’s) refrigerated logistics division, with the company admitting inquiries have been fielded.

Prompted by a piece in the Australian Financial Review’s StreetTalk section, listed AHG tells the Australian Securities Exchange (ASX) such talks as there have been have failed to progress to a definite offer.

The company revealed in its August annual results that "a substantial transformation program", was being implemented.

"AHG is currently in the process of restructuring its Refrigerated Logistics business and has not initiated a formal sale process for this business," it says.

"AHG has, at times, received expressions of interest in relation to the Refrigerated Logistics business.

"AHG confirms that none of the expressions of interest have progressed beyond informal, preliminary discussions.

"As part of the normal course of business AHG regularly reviews, among other things, the value of various businesses.

"If, at any time, there is any material development, AHG would inform its shareholders."

The speculative AFR report says AHG has investment bank UBS looking into the potential sale of the division comprising Rand Refrigerated Logistics, Harris Refrigerated Logistics, Scott’s Refrigerated Freightways and JAT Refrigerated Road Services following approaches by private equity companies.

It values the division at $200-$250 million, a discount on the $300 million it says was spent building the operation, not including restructuring and modernisation costs.

Such a result would equate with about eight times last year’s earnings before interest, tax, depreciation and amortisation (EBITDA), which were down 17.9 per cent on the previous year to $37.2 million.

Though it is not the only one at around that level, some industry observers see the valuation as a low-ball figure for what are not distressed assets belonging to a company that is in rude health.

Speculation surrounding a possible sale gained traction in July, after Deutsche Bank analysts declared the division was an anchor on the continuing high performance of its core automotive sales business and urged a divestment.

In June, Macquarie Bank questioned the division’s performance but expected a turnaround for its market in two years’ time to boost it.

A comparison has been made with vehicle sales rival and AHG shareholder AP Eegers, which has no such business but which also has little exposure in Western Australia.

AHG let the observations pass without comment.


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