The WiseTech Global Ltd (ASX: WTC) share price is dropping lower on Wednesday following the announcement of its second acquisition in the space of the month.
At the time of writing the logistics solutions company's shares are down 2% to $23.46.
What did WiseTech Global announce?
Hot on the heels of its acquisition of leading customs, bonded warehouse and trade compliance solutions provider Ready Korea in December, this morning WiseTech Global announced the acquisition of Switzerland-based SISA Studio Informatica SA.
According to the release, SISA Studio Informatica is a leading customs and freight forwarding solutions provider. It is the Swiss market leader in providing customs and logistics solutions. This includes customs clearance, freight forwarding and bonded warehouse management.
SISA Studio Informatica currently counts the likes of DHL Logistics (Schweiz), Fiege Logistik (Schweiz), FedEx, Post CH, Agility Logistics, F. Hoffmann-La Roche, and many other exporters, freight forwarders, and logistics service providers as customers.
Why is WiseTech Global acquiring it?
WiseTech Global's founder and CEO, Richard White, believes the acquisition will enhance its global customs and localisation capability.
He said "For over 40 years, SISA has accumulated a powerful breadth and depth of expertise across the customs and logistics landscape in Switzerland that will enhance our global customs and localisation capability, and further strengthen our solutions for logistics providers throughout Europe."
He also believes the acquisition "consolidates our considerable geographic foothold in customs clearance and border compliance."
"Combined with our relentless investment in innovation and expansion of our CargoWise platform, together we will continue to provide solutions to our customers that will enable greater control over international compliance and achieve lower-risk cross-border execution in the changing European and global trade landscape," Mr White added.
What are the terms?
WiseTech Global has agreed a net purchase price comprising ~$15.5 million upfront, with a further multi-year earn-out potential of up to ~$8.9 million. This relates to business and product integration, customs development and customer conversion.
In 2018 SISA Studio Informatica generated annual revenue of ~$12.4 million and EBITDA of ~$500,000. This means WiseTech Global is paying ~2x revenue and 49x EBITDA (including earn-outs).
SISA Studio Informatica is expected to be consolidated into WiseTech Global's accounts from February 2020.
