Sydney, Australia-based global logistics software provider WiseTech has announced the purchase of customs, bonded warehouse and trade compliance solutions provider Ready Korea for just over A$20 million.
Seoul-headquartered Ready Korea provides customs clearance services, bonded warehouse management and trade compliance solutions.
In response to questions from FreightWaves, WiseTech provided insight into why it bought Ready Korea along with more general information about its acquisitions strategy.
Describing it as a “key Asian economy,” WiseTech pointed out that South Korea is the eighth- largest export market and the 10th-largest import market in the world. Buying Ready Korea helped WiseTech strengthen its international reach. Meanwhile, the acquisition’s regional customs and trade management expertise helps WiseTech to expand its innovation and development capabilities, a spokesperson for the company said.
In the past, WiseTech has bought “small, targeted, predominantly founder-led, software businesses… they provide knowledge, resources and access to new key markets or acceleration of the convergence of technologies,” a WiseTech spokesperson said.
“We secure these assets to support the resourcing and speed of development necessary to deliver on our global customs strategy and expand our total addressable market,” a WiseTech spokesperson said, adding that the purchase of Ready Korea follows WiseTech’s other recent logistics-related acquisitions.
Commenting on its approach to valuing any given acquisition target, WiseTech said that the value reflects the strategic nature of the asset with “predominantly founder-led businesses identified for key attributes relevant to our needs.”
The WiseTech spokesperson said that cross-border compliance is “one of the most complex pain points for global logistics” and that it involves the “entire eco-system” of “3PLs [third-party logistics providers], BCOs [beneficial cargo owners], carriers, shippers, ecommerce and governments.”
The company offers its flagship logistics software, CargoWise One, to help tackle multiple issues in global logistics. The software helps logistics service providers to execute transactions in freight forwarding, customs clearance, warehousing, shipping, tracking, land transport, ecommerce, cross-border compliance and to manage operations on one database across multiple users, functions, countries, languages and currencies.
Ready Korea, which employs 60 people, earned revenues of $7.3 million and earnings before interest, tax, depreciation and amortization of $1.6 million.
“This transaction, while of strategic value, is not material to the WiseTech Global group,” a company spokesperson said in response to questions from FreightWaves.
The transaction, which took the form of an acquisition of 100% of Ready Korea’s shares, was funded by cash from WiseTech’s balance sheet to the tune of $13.2 million upfront with a multi-year earn-out of up to $7.0 million.
“We have substantial cash reserves and are profitable and cash-generative,” the company told FreightWaves.
The earn-out is dependent on business and product integration, custom development, customer conversion and financial performance.
Tom Kim will remain as the managing director of Ready Korea and it will continue to provide its own customs and trade management products directly to its own customers alongside, over time, WiseTech’s CargoWise One.
WiseTech also told FreightWaves that there would be “no change” to the headcount and workforce at Ready Korea and that its operations will be integrated into WiseTech.
The transaction is due to close this month with Ready Korea expected to be consolidated into the WiseTech Global accounts as of December 31.