âIn Australia, these markets are relatively small when compared to the United States. The US markets in these particular markets are approximately 16 times the size of the Australian market, which excludes cars. “
The purchase price is based on an enterprise value of US $ 1.625 billion for Trader Interactive and represents a multiple of 26.5 times adjusted earnings before interest and taxes.
Trader Interactive is a leading online trading platform in the United States, providing access to niche customers in the RV, commercial truck, powersports and equipment industries.
It operates the leading market for the purchase, sale and rental of motor homes, caravans and motor homes; the primary market for motorcycles and all-terrain vehicles, personal watercraft, snowmobiles and aircraft; the second largest market for buying and selling trucks and trailers; and the second market for the purchase and sale of commercial and agricultural equipment.
Its consumer brands include RV Trader, Snowmobile Trader, Cycle Trader, NextTruck, Equipment Trader and Rock. & Dirt.
Trader Interactive generated adjusted income of US $ 123 million and adjusted earnings before interest, taxes, depreciation and amortization of US $ 61 million in calendar year 2020.
Carsales expects earnings per share to increase on a 59.5-cent basis and to be “positive on a pro-forma basis, with single-digit EPS increase from year one expected to increase. thereafter â.
Macquarie described the acquisition as “rightly”, noting that the transaction is in line with previous Carsales acquisitions.
“The acquisition makes strategic sense although it appears reasonably priced on initial inspection,” Macquarie said in a note Wednesday morning.
Mr. McIntyre said the business and how Carsales acquires it is âvery familiarâ territory for the company. It followed a similar path when it acquired 49.9% of South Korean company Encar.com in April 2014 and its 30% acquisition of Brazilian company Web Motors in the same year.
âWe have a pedigree and an ability to build partnerships in high growth international markets. We see this as a very familiar opportunity, like what we have seen and experienced with Encar and Web Motors, âhe said.
Mr McIntyre said Carsales is keen to leverage its intellectual property and technology to help propel Trader Interactive in its growth strategy.
âThe management team is great, we speak a common business language, similar corporate cultures which is great. Love that the company is run by a female CEO [Lori Stacey] and she’s a great operator, âhe said.
âOther than that, the business is a good growth business. If you look at the compound annual growth rate, revenue and profit, EBITDA [itâs] double digit over the past two years. “
Morgan Stanley and Goldman Sachs have been appointed as underwriters. A fund managed by Goldman Sachs Asset Management Division was also an investor in Trader Interactive and one of the sellers.
Carsales has a call option to acquire the remaining stake in Trader Interactive.
In February, Carsales reported an EBITDA increase of 9 percent to $ 113.8 million in the six months ended Dec. 31, despite falling sales 6.8 percent to $ 199 million.