Consumer discretionary company, Bapcor Limited agrees to take over five companies that are commercially engaged in the sale of Japanese truck spare parts.
As per the market release dated 29 November 2018, Bapcor Limited (ASX: BAP) has inked an agreement to purchase five Australia-based companies that include I Know Truck Parts, H.I.M Spares, Don Kyatt Spare Parts, He Knows Truck Parts and Japanese Commercial Spares. [optin-monster-shortcode id=”swikrbu1d9j9aq0o4cko”]
Currently, the group of these companies operates across 10 locations in Queensland, New South Wales, Victoria and South Australia with a team of 70 people.
The acquisition of these companies comes in line with Bapcor’s strategic direction that focuses on optimization of the Group and the vertical integration of the business segments. This commercial truck group underscores the excellent fit as a specialist business and is expected to provide further opportunities for consolidation and organic expansion of Bapcor businesses.
Darryl Abotomey said, Bapcor is excited to welcome these commercial truck teams to the company. The acquisition of this commercial truck group further strengthens Bapcor’s position as a specialist provider of automotive aftermarket parts, accessories and services. The growing prevalence of smaller commercial trucks in the Australian market will provide the group with further expansion opportunities.”
On financial performance front, the earnings from the acquisition in the remaining period of the 2019 financial year are expected to offset more than the full year earnings of TRS business which was divested on 1 July 2018. It translates the sale of Bapcor’s New Zealand tyre and wheel specialist business TRS in July 2018 for NZ$20 million.
Moreover, the purchase is reported to get funding through existing debt facilities and the issuance of new shares in Bapcor Limited. The purchase cost $15 million is deferred until 12 months after completion and is subject to certain conditions. Bapcor told that completion of the transaction is expected to occur in early December 2018 and further details will provide following completion.
As per 2018 Annual Report released by the company, revenue and profit growth is expected to continue in Fiscal 2019 with NPAT results projected to be between 9% and 14% above FY18 Continuing Operations NPAT.
With this update, Bapcor’s share price surged 1.987% or $0.120 to last trade at $6.160 on 29 November 2018. BAP has a Price to Earning ratio of 17.820 x with market capitalization of $1.7 billion. The stock has seen a positive performance change of 2.72% in 12 months, but the stock price has slipped by 17.71% over the past three-months.
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