SPS Commerce, Inc. (SPSC) has acquired all the assets of Australia and New Zealand’s leading provider of cloud-based supply chain solutions, Leadtec, for $12.7 million in cash and $2.2 million in stock for a total purchase price of $14.9 million. The move will enable extension of the company’s present network of above 55,000 customers across 50 countries. The acquisition is expected to be recorded in SPS Commerce's fourth-quarter and 2014 year-end financial statements.
Melbourne-based Leadtec has the largest trading partner network in Australia with the region's premier retail companies including 7-Eleven Stores, Coles Supermarkets Australia, David Jones, Myer and Woolworths Supermarket.
SPS Commerce expects an addition of $0.75 million in revenues, while adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) will be negatively impacted by $0.3 million in fourth-quarter 2014. It also anticipates one-time expense of $0.4 million as part of the transaction and a marginal increase in share count of 40,000 shares.
For fiscal 2015, the business service provider expects to add revenues worth $4.5 million. It also anticipates adjusted EBITDA to be lower by $0.5 million in the first half of 2015. However, in the fourth quarter of 2015, EBITDA is expected to be better.
With this acquisition, both retailers and suppliers will be able to deliver a wide range of cloud-based products for consumers in the omnichannel retail marketplace. The takeover also boosts SPS Commerce’s international presence with the addition of important retailers and broadening of the present retail and supply chain team in Australia and New Zealand.
Moreover, the acquisition will boost the company’s efficiency, along with supply chain sales performance. It will also help in reducing inventory costs.
SPS Commerce will update the contribution from this acquisition for its fourth-quarter and full-year 2014 in its third-quarter earnings slated to release by the end of this month.
Currently, SPS Commerce has a Zacks Rank #3 (Hold). Better-ranked stocks in the same industry that are worth reckoning include PFSweb Inc. (PFSW), ExamWorks Group, Inc. (EXAM) and Liberty Tax, Inc. (TAX). While PFSweb sports a Zacks Rank #1 (Strong Buy), ExamWorks and Liberty Tax hold a Zacks Rank #2 (Buy).
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