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Freightways Acquires Archive Security

Freightways Acquires Archive Security

Listed express package leader Freightways Limited (NZX:FRE) today announced an unconditional agreement to purchase the business and assets of the records management company, Archive Security Limited, effective 01 March 2004.

The acquisition price of $7.5 million will be paid in two cash installments - 50% on 01 March 2004 and the balance on 01 June 2004. The purchase will be funded using existing finance facilities.

Freightways, which went to the market last year with an Initial Public Offering of $1.60 per share and listed on NZX on 29 September 2003 at $1.72, was last week trading above $2.30 per share. At the time of the listing, Freightways indicated it intended to leverage its experience by exploring incremental growth opportunities that would complement its existing operations.

“We see the acquisition of Archive Security as being consistent with that growth strategy,” says Freightways managing director, Dean Bracewell. Through Online Security Services the company has a growing presence in three key areas of the Information Management sector - records management, secure document destruction and offsite computer media management.

“While it currently contributes only a small part of Freightways’ revenue and earnings, we believe that records management in particular represents a real growth opportunity, as we estimate only around half of New Zealand businesses currently outsource the management of their records,” he says.

Archive Security has operated in the records management industry since it was set up 17 years ago and has sites in Wellington and Auckland. The Auckland operation will be integrated with the current Freightways Auckland business, while the Wellington facility, fully racked and with spare capacity, will facilitate ongoing growth, as Freightways existing Wellington facility is approaching capacity. Mr. Bracewell estimates that the Archive Security acquisition will lift Freightways to No.3 by volume in the New Zealand records management industry.

For the financial year ending 30 June 2005, the acquisition of Archive Security is expected to contribute annualised EBITA of around $1 million, inclusive of realised cost savings that will result from the integration of the business into the Freightways operation. Permanent staff in the existing Archive Security business are expected to have an ongoing role in the Freightways information management businesses.

Freightways is expected to announce its trading results for the six months ending 31 December 2003 next Monday (9 February).

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