Breaking News - SingPost Scrutinizes Acquisition of TradeGlobal

Postal and logistics provider Singapore Post (SingPost) has formed an independent committee to conduct a thorough review of the circumstances surrounding SingPost’s consideration and approval of the acquisition of US-based e-commerce logistics provider TradeGlobal.

SingPost newly opened e-commerce hub in Singapore
SingPost newly opened e-commerce hub in Singapore

Expansion plans outside of Asia
In a bid to expand its e.commerce business outside the Asian region, SingPost acquired 96.3% of the e-commerce provider for fashion, beauty, cosmetic and lifestyle products in October 2015 for US$168.6 million from private equity firm Bregal Sagemount. In the same month, SingPost also bought a 71.1% stake in Jagged Peak, another e-commerce logistics firm for US$15.8 million.
According to a recent report in the Independent, then SingPost CEO Wolfgang Baier lauded both acquisitions at the time by declaring that entering the US would transform Singapore’s postal provider into a global e-commerce player and allow the company to “cover two-thirds of the global e-commerce market.“
Surprisingly, according to the Independent report, Baier tendered his resignation from SingPost abruptly in December 2015, barely two months after he announced  the acquisition of TradeGlobal. In August 2016, Singapore’s fragrance and cosmetic distributor, Luxasia Group announced Baier had joined the company as its new CEO.

Independent committee to scrutinize SingPost’s net profit downfall
The Independent report also noted that five months after announcing his resignation from SingPost, the Singapore Business Times newspaper reported that Baier had sold off some 2.5 million SingPost shares in the market for about S$4 million. After selling off, it was calculated he still held some 1.2 million shares at the time.
Baier initially joined SingPost from McKinsey & Company as a management consultant engaged by SingPost to review SingPost’s operations. In 2011 he was appointed chief executive officer of the postal provider.

The appointment of an independent committee by SingPost, follows last month’s announcement of its full year results, which showed that net profit had dropped a massive 87% from the previous FY’s S$249 million to S$33 million, mainly due to the booking in its fiscal fourth quarter of a S$185 million impairment charge coming from the TradeGlobal subsidiary. In the meantime, the independent committee has reportedly sought legal counsel to assist in reviewing the TradeGlobal acquisition. It will assess the adequacy of the financial and commercial due diligence performed in relation to the acquisition.

SingPost said it will seek legal advice on appropriate actions, if any, to be taken arising from the findings of the committee.
The review is expected to be completed before July this year.

Nol van Fenema

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