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Date : 24/02/2023

WiseTech (ASX: WTC) shares in focus after acquiring Blume Global for US$414 million (A$600 million)

WiseTech Global Limited (ASX WTC) is an Australian technology company that provides software solutions to the logistics industry. Founded in 1994 and headquartered in Sydney, the company offers a range of products under its flagship platform, CargoWise One, designed to manage complex logistics operations.

WiseTech’s products and services are used by more than 15,000 logistics companies in over 160 countries. Its clients include some of the world’s largest logistics providers and small and medium-sized enterprises.

In recent years, WiseTech Global has expanded through acquisitions, acquiring several logistics software companies in different parts of the world, including the United States, the Netherlands, and Germany.

Despite experiencing some challenges in 2019, when the Wisetech share price fell sharply following a short-seller report, the company’s financial performance has remained strong, with solid revenue growth and profitability.

The Wisetech share price (ASX: WTC) is now on investors’ radar after acquiring a new company. The company is acquiring Blume Global for USD 414 million. As of February 2023, WiseTech’s market capitalization is around AUD 19 billion.

wisetech share price trend on tradingview.com
Source: TradingView.com

WiseTech has acquired Blume Global

In latest news, Wisetech share price is in focus after acquiring Blume Global for US$414 million (A$600 million).

The announcement of a massive acquisition must be more to prevent investors from dumping WiseTech shares this morning.

The release states that WiseTech has purchased Blume Global from funds run by Apollo, EQT, and other minority shareholders for US$414 million (A$600 million).

Blume Global is the premier supplier of an innovative system streamlining rail transport between North American cities.

The press release mentions that Blume handles intermodal containers and chassis for 6 of the 7 Class 1 US railways, ocean carriers, and other intermodal equipment suppliers and that North America is the biggest domestic logistics market in the world. Beneficial Cargo Owners (BCOs) and international freight forwarders fall under this category.

Blume, like WiseTech Global, is a high-growth recurring revenue firm projected to bring in $65 million to US$70 million in revenue for FY 2024, an increase of between 45 and 55 percent year over year.

Blume anticipates achieving EBITDA margins of about 10% for FY 2024 on a standalone basis before operational efficiencies and reaching cash flow breakeven by the end of FY 2024.

Why WiseTech Global Acquired Blume?

WiseTech Global highlighted that Blume is a high-growth recurring revenue business in addition to having great clients. It is anticipated that the performance of the company will produce sales of between US$65 million and US$70 million in FY24, representing growth of between 45% and 55%, respectively.

Blume anticipates that, on a standalone basis, it will achieve EBITDA margins for FY24 (described here) of about 10% and reach cash flow breakeven by the end of FY24. This is before the realization of operational synergies. If WiseTech’s growth rate continues accelerating, it might be good news for the Wisetech share price and its investors.

CEO Remarks

CEO and founder of WiseTech Global, Richard White, have stated that:

After acquiring Envase Technologies last month, this is another major purchase with far-reaching strategic implications. Adding rail to our landside logistics offering in North America, the world’s most complicated and biggest logistics market, is a major step forward in achieving one of our six core CargoWise growth priorities. Blume improves our product development skills and adds new expertise and a portfolio of other key product capabilities. WiseTech’s commitment to the CargoWise ecosystem is on full display with this deal, allowing for more consumer insight and greater streamlined operations across the supply chain.

Conclusion

Are ASX-WTC shares on the to buy or to hold list?

WiseTech Global (ASX: WTC) has made a very wise decision to acquire Blume. The company is on track to acquire new companies, & the acquisition of Blume is the continuation of this strategy. The addition of this acquisition will enhance Wisetech stock portfolio and reach. The company is looking to dominate the sector with this acquisition strategy in the long run.

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