A.P. Eagers Bids To Acquire AHG To Form A Merged Group Of Automotive Retail Business

A.P. Eagers Bids To Acquire AHG To Form A Merged Group Of Automotive Retail Business

A.P. Eagers Limited (ASX: APE) today proposed to acquire all the shares of Australia’s leading automotive retail group, Automotive Holdings Group Limited (AHG), to derive synergies from the combination of two highly complementary businesses. The news sent the stock price to jump by 5.632% to last trade at $7.690 on 5 April 2019.

As per the bidder’s statement dated 5 April 2019, A.P. Eagers Limited offered AHG to acquire all its shares at an exchange ratio of 1 APE share for every 3.8 AHG shares owned by AHG shareholders. The offer consideration represents a 7.63% implied premium to the market closing price of $1.780 per AHG Share as on 4 April 2019.

The commercial rationale for the merger of A.P. Eagers and AHG is underpinned by broader geographical portfolio diversification and enhanced brand portfolio. It is forecasted that pre-tax cost synergies will stand at $13.5 million annually if A.P. Eagers acquires a relevant interest in more than 90% of AHG Shares.

This Merged Group is expected to be better placed to respond to the rapidly evolving motor vehicle retailing market and pursue future growth opportunities through its diversified portfolio of motor vehicle dealerships, greater financial scale and larger, more flexible balance sheet.

In response to APE proposal, AHG’s acting chair John Groppoli stated, “AHG will assess APE’s proposal in the context of the fundamental value for its businesses, the value of the APE shares being offered and the value that can be delivered to shareholders under alternative scenarios. AHG is undertaking a strategic review of Refrigerated Logistics and continue to explore its options in relation to this asset.”

He added that AHG’s Automotive Retail business is the largest franchised automotive retail network in Australia and New Zealand, with considerable opportunity to leverage its scale to grow earnings. Similarly, the AHG Refrigerated Logistics business is the largest operator of temperature controlled logistics in Australia and is a highly strategic asset.

Sponsored ad by Kalkine

The Board of AHG advised shareholders to take no action in respect of APE’s takeover offer. It was further noted that the offer is highly conditional, with conditions including ACCC approval, an ASX market fall condition and third-party consents.

Moreover, APE pitched that the offer has the potential to provide AHG Shareholders with the opportunity to derive benefit from exposure to APE’s management expertise that has delivered a consistent record of profit, dividend and earnings per share growth over the period of long-term. It will also allow the AHG shareholders to participate in the potential upside associated with AP Eagers’ future growth strategy, The Next100.

APE stock price edged up by price to earnings multiple of 14.00x with a market capitalisation of $1.39 billion as at 5 April 2019. Over the past 12 months, APE has fallen by 14.35% despite a positive price change of 21.94% in the past three months.


This website is a service of Kalkine Media Pty. Ltd. A.C.N. 629 651 672. The website has been prepared for informational purposes only and is not intended to be used as a complete source of information on any particular company. Kalkine Media does not in any way endorse or recommend individuals, products or services that may be discussed on this site. Our publications are NOT a solicitation or recommendation to buy, sell or hold. We are neither licensed nor qualified to provide investment advice.

Join Our Discussion

Start discussion with value Investors for ASX Stock Market Investment and Opinion.

6 Cannabis Stocks under Investor’s Limelight…

Cannabis companies that sell both medicinal weed and recreational pot. Marijuana stocks to look at. Marijuana mergers and acquisitions. Dispensary data analytics. Upcoming marijuana IPO’s Those phrases have become increasingly common as marijuana legalization spreads.

Global spending on legal cannabis is expected to grow 230% to $32 billion in 2020 as compared to $9.5 in 2017, according to Arcview Market Research and BDS Analytics. As of June 29, 2018 the United States Marijuana Index, despite a lot of uncertainty around regulations, has over the past 1 year gained 71.49%, as compared to about 12% gain seen by the S&P 500.

Click here for your FREE Report


Please enter your comment!
Please enter your name here