Company to pay R1.8bn for WeBuyCars

After the Competition Tribunal blocked Naspers from acquiring a controlling 60% stake in specialist car-buying service WeBuyCars earlier this year, Transaction Capital has announced it is taking a 49.9% non-controlling stake in the company.

Transaction Capital will pay a maximum of R1.84 billion for the stake, based on an enterprise value of WeBuyCars of R3.69 billion. The deal will see Transaction Capital paying R1.47 billion in cash plus shares worth R329.3 million (at R20/share).

It also has the option to take a controlling stake at a future date.

The company will finance the payment of the R1.47 billion from a combination of existing cash resources (R900 million), existing debt facilities (R220 million) and by way of funding from WeBuyCars of R349.3 million, which will be facilitated through a subscription by WeBuyCars of preference shares in the subscriber.

On the first anniversary of the deal becoming effective, a further R40 million will be paid to WeBuyCars, made up of R20 million in cash and a further R20 million worth of newly issued shares in Transaction Capital.

WeBuyCars buys and sells used vehicles and uses data- and technology-led e-commerce and physical infrastructure, supported by a national footprint that includes seven “vehicle supermarkets” and 19 “buying pods”.

The company will continue to operate as an independent business, adjacent to Transaction Capital’s SA Taxi subsidiary. “The investment carries no integration risk for Transaction Capital,” it said.

Transaction Capital CEO David Hurwitz said: “This investment is an exceptional opportunity to own a significant interest in a trader of used vehicles in South Africa.

“The investment in WeBuyCars will be immediately value-accretive, converting interest income on our undeployed capital into higher-yielding operating earnings, accelerating Transaction Capital’s earnings growth rate.”

WeBuyCars buys about 6 000 vehicles a month on average. The used segment of the market, which conservatively trades more than one million vehicles a year, has shown a compound annual growth rate of 1.7% over the last five years.

Duncan McLeod TechCentral is editor of