LBC EXPRESS Holdings, Inc. (LBC) is propping up its logistics business with the acquisition of two firms with a combined value of more than P300 million.
In a disclosure to the stock exchange on Tuesday, LBC said it acquired a 30% stake in Orient Freight International, Inc. for P218.88 million to further diversify its business.
Under the deal, LBC will acquire Rayomar Management, Inc.’s 1.15 million common shares in Orient Freight at P63.43 apiece, for a total price of P72.94 million. The transaction will close once the Bureau of Internal Revenue’s issues a certificate authorizing the registration of the shares involved.
The company will then subscribe to an additional 3.29 million shares out of Orient Freight’s unissued capital stock at P44.40 each, or P145.89 million. LBC will be paying the company in cash.
LBC said the acquisition was meant “to diversify the corporation’s businesses and to realize returns on investments.”
Orient Freight engages in freight forwarding, warehousing, and customs brokerage businesses that has operations in the Philippines and in Southeast Asia, according to its website. It operates a fleet of land transport equipment, air freight forwarders, and sea freight forwarders that allows it to deliver faster pick-up and transfer of cargoes.
In a separate disclosure, LBC said it will subscribe to 1.86 million shares at P100 each from QUADX, Inc., equivalent to an 86.11% stake in the company. The deal will be subject to the Securities and Exchange Commission’s approval of an increase in QUADX’s authorized capital stock.
QUADX owns, maintains, and operates an e-commerce website which serves as an online marketplace and retail store.
LBC noted that Fernando G. Araneta, who holds a majority share in QUADX, is also a stockholder in LBC Development Corp., which in turn is a majority stockholder in LBC.
The payment will be made by converting QUADX’s debt in LBC’s unit, LBC Express, Inc. into equity.
“The Board also approved the acquisition of the receivables due to LBC Express, Inc. which is intended to be converted to equity in QUADX, Inc. Correlatively, based on the objective of the Company to acquire shares in QUADX, Inc., the latter has agreed to convert said debt to equity,” LBC said.
Prior to its acquisition of QUADX and Orient Freight, LBC also bought four United States-based cargo and remittance companies from its affiliate for $8.5 million, as it seeks to boost revenues from international markets. The firms are LBC Mundial Corp., LBC Mabuhay Saipan, Inc., LBC Mabuhay Hawaii Corp., and LBC Mabuhay North America Corp.
The Araneta-led firm earlier said it may breach it core net income target of P985 million for 2017, banking on the growth of the country’s logistics sector as well as the rise of the e-commerce industry.
LBC generated earnings of P733.84 million in the first nine months of 2017, 17% higher than its net income of P627.35 million in the same period in 2016. Revenues also grew 16% to P7.39 billion during the period.
Shares in LBC were up 7.01% or P1.02 to close at P15.58 each at the stock exchange on Tuesday. — Arra B. Francia