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Highlights
- RPM Automotive Group is a prominent player in the Australian automotive aftermarket.
- The ASX-listed firm has completed 100% acquisition of Vic Wide Tyre Service.
- The acquisition is expected to be immediately value and earnings per share accretive.
- The development is a major step forward by RPM Group to expand its Repairs and Roadside division.
Australia-based automotive aftermarket business RPM Automotive Group Limited (ASX:RPM) is growing its nationwide footprint of business with new acquisitions.
Most recently, the company completed the smooth transition of Vic Wide Tyre Service into its Repairs and Roadside division. It’s a major progression in achieving RPM Group’s vision and mission to fulfil demands of the country’s automotive consumers with a top-notch variety of products and services.
The acquisition of Vic Wide positions RPM as one of the largest commercial tyre businesses in metropolitan Melbourne by volume.
Overarching business of RPM and Vic Wide
Established in the year 2013, RPM has a fast-growing business of importing, wholesaling, and retailing tyres, mechanical repairs, motorsport apparel and safety equipment, niche manufacturing, and roadside assistance service for the transport industry of the country.
Known for its highest quality products and services, RPM Group hosts several brands, namely RPM Racewear, Formula Off-Road, Carline, Genie, Air Anywhere and RPM Autoparts under its vast umbrella in the Australian automotive sector.
Vic Wide delivers class-leading service, advice, range, and value for money to its commercial and industrial tyre consumer base. Operating for over two decades, the firm is forecast to register AU$11 million in revenue, AU$1.7 million in EBITDA and AU$1.45 million in net profit before tax (NPBT) in FY22, as highlighted by RPM in an early April update.
Acquisition is value and EPS accretive
The transaction is expected to be immediately value and earnings per share (EPS) accretive. It will also provide RPM with immediate cost-reduction synergies. Moreover, the deal is likely to generate further operational synergies to RPM of more than AU$350,000 every year across metro retail tyre operations.
The deal valued at AU$6.8 million (cash and equity) represents four times EBITDA pre-synergies. The cash component of the acquisition was sourced from internal cash reserves.
- Upon successful completion, Victoria Wide Tyre Service will now be trading as an RPM Automotive Group subsidiary.
- The two entities will now be operating as a culturally and operationally aligned business.
- The staff and management of Vic Wide Tyre Service will be retained to join RPM Automotive Group.
Image source: © nespix | Megapixl.com
Remarks by RPM CEO Clive Finkelstein on the select acquisition:
“There is good cultural alignment with our current operations that will begin to add value across the broader RPM network through the cross-selling of products and tyre brands to different customer bases, as well as cost synergies as a result of the scale achieved. We continue to examine other strategic opportunities to better service our customers, in line with our growth strategy, to become Australia’s leading automotive aftermarket business.”
Stock information: RPM shares were trading at AU$0.30 on the Australian Securities Exchange (ASX) midday on 23 May 2022. The company has a market capitalisation of AU$47.26 million.
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