CARSALES SIZES UP US
CARSALES.COM is driving a major international expansion and further diversifying away from its core classifieds business by buying a stake in a US automotive digital marketing platform.
As a global shortage in new vehicles shows no signs of letting up, Carsales.com is buying a 49 per cent stake in Trader Interactive for $US624m ($767m).
The acquisition will be funded through a $600m equity raising — the company’s first since its IPO more than a decade ago — and $222m of debt from existing facilities.
Group chief executive Cameron McIntyre said on Wednesday the company’s largestever acquisition would allow the company to further diversify its product offering and expand its global footprint.
“We’ve had market leading positions in what we call nonautomotive verticals like bikes, trucks and RVs since about 2005, so we’ve been in this market for many, many years,” Mr McIntyre (pictured) said.
“These other marketplaces don’t tend to get the same level of attention as cars but they attract the same sort of customers, they have private sellers and dealers, they have data like cars sites do.
“The technology, the user interface and experience whether it be on a car site or non-car site is the same — these are marketplaces we are familiar with and they are native to us.”
Under the $600m fully underwritten equity raising, 35.3m new shares, or 14.3 per cent of current issued shares, will be offered at $17 each, a 12.9 per cent discount to the $19.51 share price the company was trading at before entering a trading halt leading up to the acquisition’s announcement.
Carsales.com will join West Street Capital Partners, a subsidiary of Goldman Sachs, and Eurazeo North America as owners of the business, but retains a call option to acquire the remaining interest in Trader Interactive on specified terms.
Trader Interactive’s main business is digital marketing solutions and services across commercial truck, recreational vehicle, powersports, and equipment industries.
It also offers marketplace services across listings subscriptions, private party listings, brand advertising, listing enhancements, as well as offering software, dealer services and data insights “to provide dealer and industry intelligence for customers”, Carsales.com told the ASX.
It generated revenue of $US123m ($156.9m) and EBITDA of $US61m in 2020 and has more than 380 employees.
Carsales.com said the transaction was forecast to be earnings per share positive from completion in the first half of the next financial year, “with mid-single digit EPS accretion from year one”.
The transactions come as a resurgent Australian economy sees a boost in new car sales, while supply remains low and used car prices rise.