Pioneer to pay US$7m for Unifreight

fellow industry player Unifreight Swift in a mega-deal that will restore its leading position in the logistics business.
Pioneer Corporation shareholders will meet early next month to consider a number of resolutions, chief among them the acquisition of Unifreight Swift.

But the transaction will also depend on the company obtaining approval from the Zimbabwe Stock Exchange, the Competition and Tariff Commission and the Ministry of Youth Development, Indigenisation and Empowerment.
If the deal is approved by shareholders and regulators, Pioneer will issue 514 974 875 shares of US$0,008 each for a purchase consideration of US$4 million.

The balance, which adds up to US$7,2 million, is made up of US$900 000 Unifreight debt secured on trucks, US$1,5 million for the purchase of the Swift brand over five years and US$711 000 for Unifreight IT systems over three years.

Subject to the passing of the resolution to acquire the assets and liabilities of Unifreight, Pioneer will increase authorised share capital from 600 million shares to 1,4 billion shares to give effect to the acquisition of Unifreight assets and liabilities.

At this point Unifreight will roughly have 36,7 percent in the enlarged Pioneer Corporation Africa Group, which will certainly enjoy a fair share of the market.
The transport and logistics group’s asset base will also increase by US$12 million to US$30 million after the acquisition of trucks, trailers, vehicles and equipment of Unifreight.

According to a circular to shareholders, Pioneer saw an opportunity to claw back the market lost during the period of economic instability.
An economic downturn had seen Pioneer making losses, but a stable political and improved economic environment has seen the group making profits and generating cash in the cross-border freight and passenger operations.

Clan Transport could not turn around its fortunes in the new environment and required fresh capital injection to reposition itself and retake a claim in the market.
The unit, which made losses in 2009 and 2010 prior to closure of the consolidations business, needed fresh capital, but the group did not have resources.
An offer was then made to Unifreight as it was felt the firm had a good branch network and crucially a strong Swift brand with a fleet of appropriate size and mix.

Said Pioneer in the circular: “The acquisition of the assets and liabilities of Unifreight will complete the range of services offered by Pioneer and allow the company to better service the needs of its highly competitive market.”

This would result in critical mass, improved efficiencies and service deliverance going forward on the strength of combined experience, skills base and wide reach of the two leading transport and logistics service providers.

Pioneer has cited changes in fuel prices, levels of economic activity in Zimbabwe, increasing domestic competition, risk arising from foreign operations as factors that could have a material impact on the group’s performance.

Pioneer recorded US$23 million revenue in the full year to December 2010 while gross profit rose by US$2 million to US$7 million over the same period, but the group still recorded a US$1,4 million net loss for the period under review.