Cassons buyout zooms ahead

MOTORCYCLE Holdings, one of Australia’s biggest motorbike dealership operators, has struck a deal to buy an accessories and parts retailer for more than $120 million.

The company yesterday said the buyout was expected to increase annual revenue by about 30 per cent to $310 million, and double earnings to $30 million.

MotorCycle Holdings, which is listed on the Australian Securities Exchange, said the Cassons’ retail and wholesale businesses would increase the group’s existing retail accessory business and expand its distribution network.

Rob and John Cassen, the principals of Cassons, will take up senior executive positions with MotorCycle, with the former joining the board.

Cassons has eight shops under the name Motorcycle Accessories Supermarket in Victoria and NSW as well as online, and sells helmets, boots, gloves and bike parts.

MotorCycle managing director and founder David Ahmet said the takeover made strategic sense. “We believe that the combination of the two businesses will also present significant growth opportunities, by introducing used motorcycles and other services into the growing Cassons retail network,” he said.

MotorCycle will pay $98.7 million in cash and $24.5 million in shares for Cassons.

The cash component to be funded through debt along with $67 million be raised by selling new shares to investors in a fully underwritten renounceable entitlement offer at $3.85 a share.

In its initial public offering, MotorCycle shares were sold at $2 each. They climbed 14.7 per cent yesterday to $4.85, giving the group a market value of $184 million.