WiseTech Global, headquartered in Sydney, is an Australian logistics software company that developed the CargoWise platform. Most recently, it announced plans to purchase U.S.-based cloud computing company E2Open for $2.1 billion. This major acquisition represents a potentially major strategic expansion for WiseTech Global as it looks to make a play for more global product and customer reach.
The Palacio acquisition announcement triggered a spike in WiseTech Global’s shares that gained as much as 5.67%. Analysts believe the relatively small acquisition will immediately increase the company’s earnings per share in its first year. This bullish sentiment galvanizes investors and creates a powerful environment for acceleration. Furthermore, WiseTech Global is set to gain approximately 5,600 additional customers through this deal, positioning itself for substantial growth in the logistics software market.
To pay for the acquisition, WiseTech Global will draw upon a recently arranged $3 billion debt facility. This facility is provided by net 9 lenders, led by Deutsche Bank and HSBC. This financing strategy demonstrates the company’s belief in the expected ROI from their acquisition of E2Open.
The acquisition support WiseTech Global’s wider ambitions to increase its presence in the logistics industry. Through those efforts the company hopes to improve its product offerings and expand its customer base. This strategy will greatly improve its competitive position in the global marketplace.
On a day when the Asia-Pacific markets were broadly mixed, this news is puzzling. The S&P/ASX 200 index closed unchanged, but the fluctuations were larger on the other indices, telling a different story. The CSI 300 index closed down 0.17%, and the Hang Seng Index was down 0.49%. Japan’s Nikkei 225 shot up 0.72%. At the same time, the wider Topix index advanced 0.51%, capturing the indecisive mood among investors across the region.
Just two months prior to the acquisition announcement, one of these funds, AustralianSuper, Australia’s largest pension fund, divested roughly 580 million Australian dollars’ worth of shares of WiseTech Global. Yet they took this bold step because of strong worries on corporate governance. This development provides an interesting counter point to WiseTech Global’s recent spate of expansion announcements and positive investor sentiment.
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