Nationwide Express proposes merger with Airpak

KUALA LUMPUR: Nationwide Express Courier Services Bhd plans to merge its courier business with that of Airpak Express (M) Sdn Bhd to capitalise on the rapid growth in demand for e-commerce and online business activities.

In a filing with Bursa Malaysia, Nationwide said it had signed a conditional agreement with Ong Eng Lee and Lim Kew Wan to acquire 100% in Airpak for RM33.16mil.

Of the sum, RM30mil will be satisfied in cash and the rest through the issuance of new shares in Nationwide’s new investment holding company Nationwide Express Holdings Bhd (NEHB) that would give the vendors a 5% stake in NEHB’s paid-up capital. (NEHB will assume the listing status of Nationwide Express Courier Services.)

The Airpak group has a network of 58 service points throughout Malaysia. Other than domestic courier activities, Airpak through its international network also facilitates and services the Malaysian market with international inbound deliveries with its focus on the growing e-commerce logistics business.

“With the growing number of new online market places, the proposed acquisition is timely for the company to build its capabilities and capacities in the business-to-consumer segment and thereby, enhance revenue growth from the e-commerce last mile delivery services,” Nationwide said.

The company would also leverage on Airpak’s strength in the business-to-business segment and its vast distribution network to streamline and rationalise resources within the Nationwide and Airpak groups, it said.

These are in addition to the potential cost savings, improved business efficiencies and economies of scale to be achieved across group-wide operations.

One of the vendors, Ong, gave a profit guarantee that Airpak and its subsidiary would make a profit after-tax of RM5mil for each of the financial years ending July 31, 2017, and July 31, 2018.

Among the conditions precedent is the completion of Nationwide’s internal reorganisation exercise whereby the listing status of Nationwide Express Courier Services will be assumed by NEHB. The creation of a separate listed entity will enable the group to achieve ease and flexibility in the expansion to new business segments as and when opportunities arise.

The proposed internal reorganisation is expected to be completed in the fourth quarter of this year.

Nationwide’s proposed acquisition of Airpak, meanwhile, is forecast to be completed by the first quarter of next year.