SYDNEY: RPM Automotive Group Limited announced the acquisitions of Elite Tyre Group, Kealba, VIC (ETG) as well as Super Tyre Mart, Ravenhall, VIC (STM).
The acquisition is an asset purchase agreement, with the total purchase price for ETG and STM being $1.6 million, and consideration comprising 70% cash and 30% equity (valued at RPM’s 60-day volume weighted average price from signing of the sale and purchase agreement or 30 cents per share, whichever is the lower).
Elite Tyre Group will be integrated into RPM’s Wholesale Tyre Division (Wheels and Tyres), and STM will be integrated into RPM’s Repairs & Roadside Division effective 1 July 2021.
Commenting on the acquisitions, RPM CEO Clive Finkelstein said: “Having raised capital to fund the company’s growth, I’m delighted to welcome Elite Tyre Group and Super Tyre Mart into the RPM fold.
These two businesses are operationally and culturally aligned with RPM, and we see attractive potential to add value to both businesses through revenue synergies from cross-selling products and cross-pollinating customers, and cost synergies from the scale benefits of a larger Group.
Importantly, these acquisitions are value and earnings per share accretive before synergies, and comfortably funded, supporting further sustainable growth. We continue to evaluate further bolt-on and strategic acquisitions in line with RPM’s focused growth strategy.”
ETG is a tyre and wheel wholesaler based in Melbourne, with distribution capabilities across Australia.
It is the exclusive distributor of a number PCR (Passenger Tyre) Brands, including Imperial Tyres, Aptany Tyres, and Kinforest Tyres. ETG is able to supply passenger tyres from 12 inch to 22 inch in size, with the range focused on passenger tyres, high performance tyres, SUV and 4WD tyres.
In FY20, ETG and STM generated revenue of $5.6 million and EBITDA of $291k. Revenue and EBITDA in FY21 are forecast to be $6 million and $480k respectively.
The acquisition of ETG is strongly aligned with RPM’s goal of expanding the Group’s tyre wholesale and distribution platform. Around $250k of efficiency synergies are expected from integrating ETG with RPM’s other Tyre Wholesale Businesses.
In addition, potential revenue synergies from cross-pollinating customer-bases and cross-selling ETG’s product range are expected.
Inventory will be vendor financed and paid over 12 months. 80% of the consideration for the acquisition will be paid on 1 July 2021, and the remainder once audited financial statements for FY21 have been prepared and signed.
RPM’s growth strategy remains on course, with organic business growth exceeding budget and further potential acquisitions in the pipeline.
RPM Automotive Group Limited is a leading player in the Australian Automotive Aftermarket, comprising a number of businesses involved in importing, wholesaling and retailing of tyres, mechanical repairs, motorsport apparel and safety equipment, niche manufacturing and a roadside assistance service for the transport industry.
RPM owns brands, such as: RPM Racewear, Carline, Genie, Air Anywhere, Formula Off-Road, RPM Autoparts.
RPM is focused on the health, well-being, and safety of both its staff and customers and continues to provide the appropriate sanitation measures and social distancing regimen with regards to Covid-19 Protocols.