MaxiTrans snares Trout River brand
TRAILER GIANT MAXITRANS has bought trailer maker Trout River Australia’s owning company in a move which it says is in line with its consolidation strategy.
The Australasian Machinery Sales acquisition, bringing with it the manufacturer and supplier of live bottom trailers, is said to be a “key step” in MaxiTrans’ ‘Growth in Existing Markets’ strategic initiative.
In the 2018 financial year, Trout River Australia had about $10 million in annual sales and earnings before interest, tax, depreciation and amortisation (EBITDA) of about $2 million listed, MaxiTrans tells the ASX.
The acquisition is expected to be earnings accretive in the 2019 financial year, with returns anticipated to exceed MaxiTrans’ weighted average cost of capital in the first full year of ownership.
The acquisition of Trout River Australia will be completed in two tranches: 80 per cent for $5.9 million in cash, subject to customary completion adjustments, expected to be completed shortly, and 20 per cent for by June 30, 2021 under an earn-out arrangement.
“Following MaxiTrans’ recent capital allocation review and the sale of MTC, the acquisition will be funded out of existing cash and debt facilities,” the company says.
MaxiTrans expects the acquisition to provide benefits to the group, including the addition of live bottom trailers into MaxiTrans’ portfolio, which it says will add products with strong application in the infrastructure construction sector.
The purchase is also expected to leverage MaxiTrans’ national dealer network, driving increased sales of Trout River Australia live bottom trailers.
In addition, MaxiTrans says it will improve production capacity and efficiency of the existing Trout River Australia business by leveraging MaxiTrans’ facilities, procurement systems and engineering and manufacturing expertise.
“We look forward to welcoming John Surwillo and Neil Lehman, the current owners of Trout River Australia, to the MaxiTrans group,” MaxiTrans managing director and CEO Dean Jenkins says.
“John and Neil’s ongoing involvement in the business will facilitate a smooth transition and enable the Trout River Australia business to continue to benefit from their deep product knowledge.”