WiseTech Global Ltd (ASX: WTC) has announced that it is acquiring Ulukom, a leading logistics and customs solutions provider in Turkey.
WiseTech Global is a leading developer and provider of software to the logistics industry around the world. It boasts of having over 7,000 logistics company customers across 130 countries, including 33 of the top 50 global third party logistics providers and 24 of the 25 largest global freight forwarders.
The acquisition
Ulukom is headquartered in Istanbul and offers a range of logistics, freight forwarding and warehouse options to many different clients including Maersk.
The purchase cost will be around $2.9 million upfront, with a multi-year earn-out potential of up to $4.6 million that relates to integration, product development, customer conversion and revenue growth.
In 2017 Ulukom generated $1.9 million of revenue and around $500,000 of earnings before interest, tax, depreciation and amortisation (EBITDA). WiseTech is expected to be consolidated in the accounts from July 2018.
WiseTech Global's CEO, Richard White, said "As the bridge between Europe, the Middle East and Asia, and one of the EU's largest trading partners, Turkey has long been a key market in the region and globally. Ulukom brings valuable experience, management and industry knowledge to the WiseTech Global group, which will deepen our reach in this important Eurasian market."
Foolish takeaway
WiseTech Global itself admitted that while this transaction is strategically important, it isn't material to the overall company. Turkey does have a large population so in time Ulukom could make a meaningful contribution, but for now it doesn't change the outlook for the company.
The company has gone on an acquisition spree in recent times and it's currently trading at a very high valuation. I don't think it's a buy at the current level, but it's an interesting one to watch.
