Offloading smash repairs will let group sharpen its core focus Suncorp in $440m deal
INCREASINGLY complex and costly technology in new cars has prompted Suncorp Group, Queensland’s largest company, to sell its lucrative smash repair and parts businesses in a $440 million deal.
Asx-listed AMA Group paid $420 million for Suncorp’s Capital Smart repairs business and $20 million for its ACM parts operation.
Suncorp signed a binding agreement with AMA Group to sell Capital Smart Group, its market-leading smash repair business in Australia and New Zealand, for an enterprise value of $420 million.
The sale will be in the form of upfront cash proceeds and the retention of a 10 per cent interest in the business, which includes a board seat.
As part of the deal, AMA will have a 25-year agreement with Suncorp.
Suncorp Group CEO Steve Johnston said that the transaction was in the best interests of customers, shareholders and the business.
“The increasing complexity of repairs is driving significant change in the smash repair and parts procurement industry, and the divestment means Suncorp can focus on its core insurance and banking operations,” he said.
“Importantly, the agreement maintains Suncorp’s competitive advantage and we look forward to working with AMA as an ongoing partner.”
The announcement follows a review of the Capital Smart business and evaluation of the long-term outlook for the competitive and complex smash repair industry.
Suncorp’s insurance arm refers 160,000 vehicles each year for repair, generating $46.4 billion in revenue over the life of the contract.
Suncorp Insurance CEO Gary Dransfield said the decision to sell Capital Smart was made as advances in crashprotection meant cars were becoming more complex and costly to fix.
“There are more sensors in cars and there are more airbags in cars … more collision avoidance systems,” he said.
“They will collide less over time but when they do there are more systems, sensors in them that need to be reset.
“They’re more complex to replace than traditional panel damage.
“They’re also parts that are not as easy to acquire as quickly as simple panels might have been in the past.”
Mr Dransfield said retaining a 10 per cent stake in the company and a board seat provided a “level of commitment” from Suncorp to AMA.