Wheres can this UPI article be found that everyone keeps referring to??
The Drudge report times out.
WiseTech locks in $4.7b in financing to secure biggest US purchase yet, page-33
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Announcement from ERM has made my day. :)
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For macropunter (how he talks so much rubbish)
Its largest acquisition ever should transform WiseTech Global into the global trade powerhouse its founder wants it to be.
-Past three years landed acquisition target E2open in struggle street
-E2open’s demise has become WiseTech Global’s opportunity
-Strategically and financially positive, the acquisition could be transformative
-WiseTech’s 55 acquisitions to date provide management with great track recordBy Danielle Ecuyer
Light at the end of the tunnel
The past twelve months have been quite the roller coaster ride for WiseTech Global ((WTC)) shareholders.
The smorgasbord of negative impacts includes media and corporate governance scrutiny of the Founder, Executive Chair, and Chief Innovation Officer’s personal life, as well as potential crossovers and conflicts of interest with the company he founded.
The stream of newspaper headlines has seen the share price fall from what were probably overbought levels around $140 in November last year to a sub-$80 low at the height of US tariff concerns in April.
Over the interim, Richard White’s position was transitioned to consultant and then reinstated to a more substantive position following several high-profile resignations.
The company is still wanting of a succession plan, but hey, who needs one of those given WiseTech has just announced the biggest and most ambitious acquisition in its history under the stewardship of White: the US$2.1bn takeover of Texas-based E2open.
WiseTech’s history a good starting point
By way of context, WiseTech has a history of bolt-on acquisitions, 55 over the past decade. Over that time frame, the company has achieved a market capitalisation of circa $35bn against an IPO valuation of $974m in April 2016. For those on board around the IPO and still holding on today, that trajectory translates into a return of 3,577.62%.
Over the years, many questions have been raised whether the acquisition strategy would succeed. Another stumble block stems from the higher valuation multiples ascribed to the stock, tripping up many a value investor.
The company’s flagship product is CargoWise, an end-to-end logistics execution software platform used by freight forwarders, customs brokers, third-party logistics providers (3PLs), and multinational shippers. It is designed to manage and automate complex logistics operations across international supply chains.
Looking under the hood, Morningstar believes the switching costs for customers of WiseTech’s main offering, CargoWise, are one of the most important factors for the company’s competitive advantage, with annual retention rates over 99% since 2013.
Through this period, the company has pushed through steep price rises.
Morningstar believes CargoWise assists customers in outperforming competitors, which in turn lowers the risk of business failure.
Prior to the takeover, Morningstar noted half of the world’s top 25 freight forwarders and a quarter of the largest 200 freight forwarders have signed up to use the software. Still, less than 10% of international freight forwarding volumes is estimated to go through the CargoWise platform.
Why E2Open?
According to Morningstar, CargoWise’s main competitor in international freight forwarding is not Canadian company Descartes or US Flexport, but rather E2open’s Blujay which has, the analyst’s words, “fallen apart”.
WiseTech has jumped on the opportunity of a decline in E2open’s share price of -70% over the last three years.
The bid at US$3.30 per share represents a 29% premium to the May 23 closing price, but is still -56.8% below the price a year ago.
According to WiseTech founder White: “Acquiring E2open is a strategically significant step in achieving our expanded vision to be the operating system for global trade and logistics”.
Expanding the market base
E2open is a supply chain SaaS (Software-as-a-Service) provider, founded in 2000, with operations across 20 countries and a cloud-based platform that connects over 500,000 partners including manufacturers, logistics providers, and distributors with 18 million transactions annually.
WiseTech’s ambition is to become an end-to-end supply chain solutions services provider beyond CargoWise’s logistics execution software.
E2open brings along a substantial uplift in the direct customer base and industry exposure to upstream shippers and manufacturers, referred to as beneficial cargo owners, ‘those companies which produce and sell goods, including 5,600 customers and over 250 top-rated companies across autos, retail, pharmaceuticals, consumer goods, aerospace, and more”.
It opens greater exposure to US and European markets, as well as bringing in relationships with major shipping lines and carriers.
Importantly, E2open moves WiseTech from serving the logistics industry to serving the entire supply chain, shifting from freight forwarding and warehousing to an end-to-end global trade platform.
Seems too good to be true?
Too good to be true? Certainly, that is what some analysts are thinking.
Jarden is notably circumspect while acknowledging the strategic fit and potential benefits of the takeover, including management’s expectations that global supply chain/logistics software spend will rise at a compound average growth rate of 16% from US$28bn in 2024 to US$57bn in 2029.
The analysts’ concerns centre on E2open’s flagging financial performance over the last couple of years, which resulted in the share price fall that became the precursor to the WiseTech bid.
UBS highlights E2open delivered a string of below-expectation earnings results, with management changes and a strategic review that contributed to the acquisition multiple at circa 3.5 times Enterprise Value to Sales against WiseTech’s historical takeover multiple of around 6.1 times.
Jarden queries the churn rate for E2open and the operating loss in 2024 of around -US$24m, which was caused by sizeable goodwill write-downs on acquisitions.
Morningstar points to integration problems with the many acquisitions, “especially between its products for freight forwarders, such as BluJay and the beneficial cargo owners. High debt created further pressure”.
At an enterprise value of US$2.1bn, the takeover does lift net gearing for WiseTech to 3.5 times.
On the flipside, if the integration, cost-stripping, and synergistic benefits are realised, E2open will be EPS-accretive in the first year of consolidation, and cash flows will allow WiseTech to deleverage to under 2 times within three years, with all of E2open’s debt facilities to be repaid upon completion of the acquisition, Morgans notes.
E2open is financially larger than all previous acquisitions over the last decade, with FY25 revenue of US$608m against Jarden’s revenue estimate for WiseTech of US$797m for FY25.
Bell Potter also highlights a level of risk to the integration of such a sizeable company but views the track record of success as going some way to ameliorating the risks.
What E2Open is flagged as contributing
WiseTech has been upfront about expectations that E2open will be EPS-accretive in year one, pre-synergies of -US$50m targeted to be achieved over two years.
UBS notes management has ambitions to reach an earnings (EBITDA) margin of 50%, although E2open’s FY25 EBITDA margin of around 35% could be slightly dilutive, initially.
The -US$50m in synergies represents around 11% of E2open’s operating expenses in FY25 and can be achieved via the elimination of US listing fees and other efficiencies, the broker explains.
Goldman Sachs forecasts the transaction to be EPS-accretive by 8% to 10% for FY27, assuming no revenue synergies and -US$60m in cost-outs against -US$50m guided, as well as WiseTech achieving a margin of over 50%. This analyst is positive the company can achieve its financial goals.
While investors were disappointed by the delay in the rollout of WiseTech’s Container Transport Optimisation (CTO) in the US last year, UBS points to E2open’s circa 18.5% market share of ocean booking management, which offers CTO broad container volume data to help customers make better decisions.
The analyst notes industry feedback via channel checks that combining CTO and E2open’s INTTRA product could result in a much-improved service offering for search/booking procedures for landside logistics.
CTO is part of CargoWise and aims to improve the efficiency of landside container logistics.
Bell Potter sees the launch of CTO in FY26 as another positive for the company, with management confirming the proposed takeover will not alter the timeline of CTO’s rollout in FY26.
Brokers are essentially upbeat
Morgan Stanley is very positive on the intended acquisition and thinks it makes both strategic and financial sense for WiseTech. Conviction in the company achieving medium to longer term growth prospects is increased. Morgan Stanley has a Buy-Equivalent rating with a $140 target price.
UBS is also very upbeat and remains confident in WiseTech’s ability to achieve the forecast compound average growth rate of 28% for core CargoWise revenue over a five-year period.
This analyst points to upside risks if management can increase product capability offerings from the acquisition. UBS is awaiting more details on E2Open before adjusting earnings forecasts. Buy rating and $145 target remain.
Other FNArena daily monitored brokers Morgans and Bell Potter are also positive with Buy-equivalent ratings and respective target prices of $132.40, upgraded from $124.10, and $122.50, lifted from $112.50.
The current consensus target price sits at $136.10.
Outside of daily monitoring, Goldman Sachs is equally buy rated with a $126 target, noting management re-iterated FY25 guidance.
E&P (the old Evans & Partners) rates the stock as Positive with a $139m target, highlighting the market has been given time to consider the strategic reason for the acquisition as well as the pricing. This analyst cautions as a rule of thumb the leverage at 3.5 times is high for a software company.
Jarden is Neutral rated with a $100 target and RBC Capital Buy-Equivalent rated with a $110 target.
Do as they may with forecasts, like the many acquisitions over the past decade, it will be incumbent on WiseTech management to prove it can assimilate, digest and improve profitability for E2open on what sounds at the very least like a potential game-changing development.
Research house Morningstar is also positive on WiseTech with a $130 per share valuation. This analyst is upbeat on the acquisition price and the strategic opportunity, as well as blocking competitors like Descartes from acquiring the company.
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Last
$108.93 |
Change
1.560(1.45%) |
Mkt cap ! $36.45B | |||
| Open | High | Low | Value | Volume |
| $107.24 | $110.99 | $107.06 | $57.66M | 527.2K |
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| No. | Vol. | Price($) |
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| 1 | 497 | $108.90 |
Sellers (Offers)
| Price($) | Vol. | No. |
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| $108.93 | 166 | 1 |
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| Last trade - 16.10pm 18/06/2025 (20 minute delay) ? |
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$109.32 |
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1.560 ( 1.54 %) |
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| $107.12 | $111.00 | $107.08 | 134919 | ||
| Last updated 15.59pm 18/06/2025 ? | |||||
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