Freightways acquires MSS

Freightways has purchased MSS Records in Christchurch for $1 million dollars. It intends to merge the operation into its Online Security Services business.

“Inclusive of synergies gained by merging MSS into Freightways’ established Archive Security business, incremental EBITDA of NZ$0.3 million is expected to be achieved in the 2008 financial year from MSS.” [Freightways Media Release]

My read on this is that incremental means once the synergies are achieved. Synergies generally save money, so it is safe to assume that the EBITDA (operating cashflow) was lower.

This causes me to wonder what sort of multiplier Freightways paid for MSS against its existing EBITDA.

If the MSS EBITDA was
250k it would have been 4
200k it would have been 5 (my random blink would be this one)

Once they get the synergies (which Freightways will) it becomes a 3. Not a bad buy, one less competitor and 3 years to repay the investment.

Freightways said it is looking for more acquisition opportunities.