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Freightways buys two Australasian document shredding firms for $13M

Freightways [NZX: FRE], New Zealand's largest listed courier and data management company, has bought two document shredding firms, one on either side of the Tasman, for an aggregate $13 million.

The Auckland-based company bought Australia's Advance Security Destruction Services and Hastings-based Docushred, effective from the start of this month, and expects the acquisitions to immediately add to earnings, it said in a statement. The purchase price includes execution costs, and Freightways anticipates the two firms will add $6 million to annual revenue and about $2.5 million to earnings before interest, tax, depreciation and amortisation.

Freightways reported annual sales of $406 million and EBITDA of $77 million in the year ended June 30, of which its information management unit accounted for $100 million to revenue and $23 million to earnings.

"Advance will underpin Freightways' New South Wales secure document destruction operation, further strengthening the Australian nationwide service operated by its subsidiary Shred-X Pty Limited," the company said. "Docushred will further extend the geographic reach of Freightways' New Zealand business, Document Destruction Services."

Freightways has been beefing up its information management unit in recent months, the most recent being the acquisition of Brisbane-based Document & Data Storage Management and Dunedin-based Document Destruction Services, and managing director Dean Bracewell told shareholders in October the company will continue to expand through alliances or new purchases.

The company's shares were unchanged at $4.50 on Friday, and have gained 5.9 percent this year, lagging the 12 percent increase on the NZX All Index, a capital measure of domestic equities, over the same period. The stock is rated an average 'hold' based on six analyst recommendations compiled by Reuters, with a median target price of $4.38.