The Singapore based airline services company, SATS, has agreed to buy the leading air cargo handler WTS for a cash payment of €1.187bn/Sg$1.639bn.
As so often with these types of purchases, the deal with the owner of WTS, the US Private Equity company Cerberus Capital Management, is complex and SATS does not yet appear to have released all of the details of the deal. However, a statement from SATS said that the transaction values WFS at €2.25bn and implies a price to earnings ratio of 9.7 times earnings before interest, depreciation and tax (EBITDA).
The acquisition represents a significant move for SATS which up until now has concentrated on airline passenger services such as food served on aircraft. With this acquisition the company has now become one of the largest handlers of cargo within and around airports at a global level. WTS has a presence at air freight facilities within airports across Europe, North America as well as regions such as South America. It has less exposure in SATS’ home region of South East Asia. It is an interesting company, with access to a broad range of logistics resources including own-account truck fleet, ramp-services as well as cross-docks and warehousing. The latter are particularly useful in market segments such pharmaceutical logistics.
Buying WTS is a statement of belief in air freight by a company based in a city-state that owes much of its prosperity to the strength of its air logistics capability. Although it should not be ignored that WTS is not just a logistics provider, the focus of much of what SATS has said about the deal seems to focus on logistics. Part of the logic of SATS’ strategy seems to be an expansion of WTS’ footprint across South East Asia and other parts of the wider Asia-Pacific region with a particular focus on Singapore. It is worth noting that SATS is partially owned by the Singaporean State investment fund, Temasek.
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Source: Transport Intelligence, 29th September 2022
Author: Thomas Cullen
GLOBAL SUPPLY CHAIN INTELLIGENCE (GSCi)