Australia's Qantas and state-owned mail service Australia Post said on Friday they would buy local freight courier Star Track Express for AUD$750 million (USD$554 million) in a joint bid.

Privately owned Star Track Express, founded 30 years ago by Greg Poche, has up to 15 percent of Australia's lucrative AUD$4.5 billion (USD$3.3 billion) express freight market.

The purchase would be made through a 50:50 joint venture and funded from cash reserves and undrawn credit facilities, Qantas and Australia Post said in a statement.

"This acquisition is consistent with the Qantas strategy of growing its non-airline business," Qantas Chief Executive Geoff Dixon said in the statement.

Star Track Express had been considering a float on the Australian Stock Exchange next year, given the robust IPO market, but several trade buyers were also interested.

The Qantas/Australia Post venture bid against a similar joint effort between Patrick Corp, which part-owns airline Virgin Blue, and Deutsche Post courier service DHL.

ABN AMRO Capital, the private equity arm of investment bank ABN AMRO, was also interested, with market speculation centered on a price tag of about AUD$700 million.

Star Track is forecast to achieve earnings before interest, tax, depreciation and amortization (EBITDA) in 2003/04 of AUD$84 million, implying a price/earnings multiple of almost nine times.

A source close to the deal said the decision to go with a trade sale rather than an IPO had been a close call, but Poche believed the business would prosper under the new owners.

The 30-year-old company, which began life in a single office on Sydney's northern beaches, operates from 52 sites and has staked its reputation and its growth on state-of-the-art logistics technology.

The bulk of its business is express road freight, which accounts for about 90 percent of revenue, while the company is growing its air express and warehousing businesses.

Current Star Track Chief Executive Derek Lightfoot and his team will continue to run the business, while founder Poche will remain on Star Track's board.

(Reuters)