Stonepath acquires China forwarder

Stonepath acquires China forwarder

Stonepath Group said it completed its acquisition of a majority interest in Shaanxi Sunshine Cargo Services Int'l Co., LTD., a leading freight forwarder headquartered in Shanghai.

Stonepath has agreed to pay up to $11 million for a majority interest in the business, with $5.5 million paid at closing through a combination of $3.5 million cash and $2 million in the value of the its common stock. The remainder of the purchase price will be paid through a five year earn-out arrangement of up to $5.5 million based upon Shaanxi achieving annual net income before taxes of $4 million.

Shaanxi reported revenues of $55 million for the 10-month period ended Oct. 31, 2003, Stonepath said in a news release.

Shaanxi provides customized transportation and logistics services and supply chain solutions including global freight forwarding, warehousing and distribution, shipping services and special freight handling.

"Shaanxi is a very strong addition to the Stonepath organization, broadening our service capabilities, further diversifying our client relationships and significantly expanding our international network in Greater China," said Dennis L. Pelino, chairman of Philadelphia-based Stonepath. "With Shaanxi and our recent acquisitions in Hong Kong, Singapore and Malaysia, Stonepath is in an excellent position to deliver a broad range of supply-chain strategies to our clients on a global basis and to take advantage of the tremendous demand for integrated logistics services between the U.S. and Asia and other key markets."

The transaction is scheduled to take effect March 1. Stonepath said the deal has been included in its second-quarter guidance of $14 million of EBITDA on $300 million of revenues.