SingPost shareholders vote in favour of selling Australian logistics business

Singapore Post (SingPost) shareholders have overwhelmingly backed plans to sell the company's profitable Australian logistics business, a move likely to yield a special dividend but leave them with stakes in a struggling postal operation.

- Kang Wan Chern

More than 99 per cent of eligible shareholders voted at an extraordinary general meeting on March 13 to dispose of Freight Management Holdings (FMH), one of Australia's largest logistics providers, to Australian private equity firm Pacific Equity Partners.

SingPost expects to receive gross proceeds of about A$775.9 million (S$651 million) and a profit of around S$289.5 million from the sale.

The move values FMH at A$1.02 billion. SingPost chairman Simon Israel noted last month that after accounting for the debt, the sale should be around four times the company's return on investment.

Once the deal is completed later in March, SingPost intends to use the proceeds to repay A$362.1 million in borrowings taken to finance FMH's acquisition. It will then pay a special dividend to shareholders, with the amount to be announced at its annual general meeting, which is usually in July.

However, the FMH sale raises questions about SingPost's long-term growth potential as it leaves the company with an ailing Singapore postal and logistics business as well as a change in leadership.