WiseTech Global Ltd (ASX: WTC) shares are charging higher on Friday.
In morning trade, the logistics solutions platform provider's shares are up 3% to $97.11.
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WiseTech shares higher on acquisition news
Investors have been buying the company's shares this morning after it confirmed media speculation that it is in discussions to acquire US based supply chain platform provider e2open (NYSE: ETWO) for an estimated $3.5 billion.
According to the release, these discussions are part of the company's strategy to continue to accelerate its product development and ecosystem reach through a pro-active acquisition program that includes strategically significant acquisitions as well as tuck-ins and foothold acquisitions.
Management highlights that it continues to evaluate acquisition opportunities globally and this includes taking part in a strategic review process which was announced by e2open in March.
However, it has warned that "discussions are indicative and there is no certainty that a transaction will result and, if a transaction does result, when or on what terms such a transaction may occur."
It will continue to keep the market informed in line with its continuous disclosure obligations.
Broker reaction
Goldman Sachs has responded positively to the news. It said:
Should this transaction proceed, it would be consistent with WTC's stated strategy of accelerating product development/ecosystem reach through smaller tuck-in acquisitions, alongside larger strategically significant acquisitions (most recently acquiring Blume for A$600mn & Envase for A$326mn in early 2023) while potentially providing WTC with: (1) Significant logistics data assets (i.e. 500k connected Enterprises, 18bn supply chain transactions, 67bn annual restricted party screenings); (2) Increased customer relationships/touchpoints (E2 has ~5,800 clients, including rollouts key FF customers C.H. Robinson, Hitachi Transport Systems, DSV European Road); (3) Sig. earnings, noting that E2 generated fully expensed EBITDA of US$190mn in FY25 vs. WTC US$186mn – but rev has declined -3-6% in recent qtrs.
e2open is a connected supply chain software platform, enabling companies to move and sell goods and services. It was founded in 2000 and has since made numerous acquisitions, incl. the business combination with BluJay solutions at an implied transaction value of US$1.7bn in 2021. We summarize key financial/operational data, noting: (1) E2open has a significant logistics ecosystem (Exhibit 7); (2) Although growing revenue/ebitda strongly over time – this has largely been inorganic, with recent rev growth declining – but E2 has retained LT targets of double digit subscription rev growth & mid 70/30s GP/EBITDA margins.
Goldman currently has a buy rating and $128.00 price target on WiseTech shares.
