The WiseTech Global Ltd (ASX: WTC) share price is tumbling lower on Tuesday despite an acquisition announcement.
At the time of writing the logistics solutions company's shares are down 2% to $25.16.
What did WiseTech Global announce?
This morning WiseTech Global announced the acquisition of Ready Korea for an upfront fee of $13.2 million.
Ready Korea is a leading customs, bonded warehouse, and trade compliance solutions provider in South Korea.
It offers a cross-border compliance solution, which facilitates the lodgement of electronic transactions to the Korean Customs Service. This includes customs brokerage and refunds, and Free Trade Agreement verifications, along with bonded warehouse management.
Ready Korea also provides a trade administration solution to facilitate the generation and submission of electronic import/export documentation.
It counts the likes of FedEx, Bayer Korea, Korea 3M Corporation, Samsung, Siemens, and Johnson & Johnson as customers.
Strengthening its international reach.
WiseTech Global's founder and CEO, Richard White, believes the acquisition will strengthen its international reach.
He said: "As the 8th largest export market and 10th largest import market1 in the world, South Korea plays a key role in Asia's, and the world's, supply chains. Bringing Ready Korea's regional customs and trade management expertise into the group now expands our innovation and development capabilities in this important region as we continue to build-out our global customs footprint."
"This is a further step in strengthening our international reach deeper across Asia and together we will develop even more productive and valuable cross-border logistics solutions for our regional and global customers," he added.
The deal.
WiseTech Global has agreed to pay an upfront fee of $13.2 million for Ready Korea. In addition to this, the deal includes a further multi-year earnout potential of up to ~$7 million related to business and product integration, customs development, customer conversion, and financial performance.
In calendar year 2018 Ready Korea's achieved revenue and EBITDA of ~$7.3 million and ~$1.6 million, respectively. This means WiseTech Global is paying 8.25x CY 2018 EBITDA for Ready Korea based on its upfront fee.
Ready Korea will remain under the leadership of its managing director, Tom Kim. It will continue to deliver its customs and trade management solutions directly to its own customers, along with CargoWise over time.
