Integrated logistics provider Qube (ASX:QUB) issued its formal takeover to the shareholders of target logistics service provider, Chalmers (ASX:CHR) on Monday, July 8.
Qube, which owns Australian marine container terminal operator Patrick, is offering one of two options. Chalmers shareholders can opt for 2.31 Qube shares for each Chalmers’ share (the ‘scrip’ option). As of the last trading date, the implied scrip option was A$7.00. Or, alternatively, they can instead accept A$6.50 cash for each Chalmers share.
Directors at Chalmers noted that the scrip option puts a premium on Chalmer’s stock of between 49 percent to 72 percent depending on which time period the company’s share price is averaged over.
Chalmers’ directors accept
“The consideration under the Offer represents a substantial and attractive premium,” the Chalmers directors said, adding that the deal offers shareholders the opportunity to “share in the continued growth of the business as part of the broader Qube group.”
Chalmers Executive Chairman Graham Mulligan said “the proposal to purchase all of the shares in Chalmers under the Offer is clearly compelling and represents a significant premium to the recent share price performance.”
The Chalmers directors have unanimously recommended that the takeover offer be accepted in the absence of a superior proposal.
The offer is conditional on Qube acquiring 90 percent of the equity and there being no material adverse change in Chalmers or no other unpleasant surprises.
Chalmers shareholders have a month to decide whether or not to accept.
Profile: Chalmers
In the 12 months ended Jun 30, 2018 (the Australian financial year runs from July to June), Chalmers generated A$68.1 million (US$47.6 million) of revenues. However, because its expenses topped A$68.4 million (US$47.8 million), the company did not make any profit in the last financial year.
Chalmers offers drayage services in Melbourne and Brisbane, 24 hours a day Monday through Friday. It owns more than 100 vehicles, which have carriage capacity between 8 to 105 metric tonnes (a metric tonne is equivalent to 2,204.6 U.S. pounds). The fleet includes B-doubles, side loaders, dropdeck and retractable trailers, super B-doubles and tautliners. Its freight division offers cargo consolidation and de-consolidation for a wide variety of cargoes. Reefer and break-bulk warehousing are also provided.
The target company also runs container parks and offers biosecurity facilities.
Profile: Qube
At the end of June 2019, Qube had a market capitalisation of A$4.8 billion (approximately US$3.36 billion) and it operates in over 130 locations in Australia, New Zealand, Papua New Guinea and Southeast Asia. It has a workforce in excess of 6,500 employees.
For the half year to the end of December 2018, the company earned A$887 million of revenues (US$620 million) and generated a net profit after tax of A$61.5 million (US$43 million).
Qube’s main business line is the marine box terminal operator, Patrick, which offers container loading and unloading at Brisbane, Sydney, Melbourne and Fremantle. Patrick Terminals handles over three million twenty-foot equivalent container units per year.
Qube also has extensive port operations in the automotive sector, unloading over 750,000 units per year in seven ports across Australia. It also offers vessel agency, freight forwarding, warehousing, inventory and logistics management, oil and gas supply base operations, vessel chartering, mine and mine resupply, road haulage with over 800 prime movers and 150 rail services a week. It also operates and builds logistics parks.