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DFM-listed logistics giant Aramex will have until Friday, 14 March, to either accept or reject ADQ subsidiary Q Logistics Holding’ offer to acquire 100% of the freight services firm, according to the official bid document (pdf). The transaction is expected to be completed in 3Q 2025, while payment of consideration will be made within three days after completion of all the required steps.
REFRESHER- Through its subsidiary Q Logistics Holding, ADQ offered last month to buy all the Aramex shares that aren’t owned by AD Ports — another one of ADQ’s subsidiaries — which has a 22.69% stake in the freight services firm. This would be through a cash-consideration of AED 3 per share. The strategic acquisition would value Aramex at AED 4.4 bn, according to our calculations.
The pitch: ADQ wants to transform Aramex into a globally competitive company in the freight services industry, but this is expected to be “complex, capital intensive and to take time,” the document reads. This will “consequently limit the perspective of short to medium-term return for shareholders.”
Strong valuation, despite the decline in performance: The offer price of the transaction represents an attractive valuation, reflecting a strong multiple of 9x enterprise value to EBITDA for the twelve months ending September 2024, and a multiple of 29x price-to-earnings ratio for the same period. These multiples indicate that the company is being valued more favorably in terms of its earnings and growth potential, suggesting investors are willing to pay more for each USD of earnings, which is not uncommon in strategic acquisitions.
IN CONTEXT- Aramex's financial results have demonstrated a decline in performance since 2019, according to the offer document, adding that the company also declared that no dividends will be issued for 2023, indicating a lack of returns for its shareholders.
ADVISORS- Rothschild is acting as financial adviser for Q Logistics, while Emirates NBD capital is the lead manager for this project. Clifford Chance was hired to provide counsel on the potential acquisition. Aramex tapped HSBC as its financial advisor for the potential takeover.
