The Regional Express Holdings Ltd (ASX: REX) share price is taking off on Friday with news the company is snapping up a leading fly-in, fly-out (FIFO) service provider.
Rex has agreed to acquire National Jet Express (NJE) – the regional services arm of Cobham Aviation Services Australia – for $48 million.
At the time of writing, the Rex share price is $1.27, 4.53% higher than its previous close.
Let's take a closer look at the company's previously speculated acquisition.
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Rex announces $48m FIFO acquisition
The Rex share price is rejoicing during a disappointing day for most ASX shares after the regional and domestic airline announced a major acquisition.
The company, its joint venture partners, and its chair are joining forces to acquire NJE.
NJE is a leading provider of FIFO services in Western Australia and South Australia, operator of freight services between many of Australia's capitals, and provides charter services to Papua New Guinea.
It brought in $142 million in revenue in 2021. The business also brings eight Bombardier Q400 turboprops and six Embraer E190 jets to the table.
The Rex share price had been frozen since Tuesday as the company prepared to announce its latest acquisition.
Rex executive chair Lim Kim Hai said the "completely modern fleet" represents greater fuel efficiency, operational reliability, and lower emissions than competing FIFO airlines. He continued:
With this acquisition, Rex will have a FIFO arm that is simply unparalleled in Australia.
NJE will naturally be the partner of choice for resource companies all over Australia who have been crying out for so long for a FIFO provider that is able to address their triple priorities of minimal impact on the environment, comfort and safety of its staff, and reliability of service.
Rex will fund 50% of NJE's purchase price, drawing an extra $15 million under its debt facilities to do so. The remaining 50% will come from its joint venture partners, one of whom is Rex's chair.
The company's chair will be putting their private funds towards the acquisition. They will convert that debt funding to issued new shares in NJE to reduce Rex's debt burden.
The joint venture is also planning to modernise the business' aircraft and technology offerings to expand its FIFO services into Queensland and the Northern Territory.
Rex share price snapshot
Today's gain hasn't been enough to boost the Rex share price into the longer-term green.
The airline's stock is currently around 10% lower than it was at the start of 2022. Though, it has gained 5% over the last 12 months.
