SYDNEY, AUSTRALIA: RPM Automotive Group Limited (ASX: RPM) has announced its plans to acquire Chapel Corner Tyres, a well-established automotive parts wholesaler and retailer based in the Southern Melbourne metro area.
The acquisition, set to take effect on 1 September 2023, is aimed at scaling RPM’s wholesale tyre division distribution network in the Victoria metro region.
Chapel Corner Tyres, which has been in operation since 1976, generated a noteworthy $518.5 million in revenue and $5.9 million in EBITDA during the fiscal year 2023. The company is projected to contribute an annual EBITDA of $1.15 million following the acquisition. The strategic alignment between the two entities is seen as an opportunity to expand the customer base and cross-sell a broader range of RPM products.
One of the key advantages of this acquisition is the potential cost synergies of up to $5.5 million. These synergies can be achieved through various means, including the consolidation of metro Victoria distribution, shared services such as occupancy, human resources, and logistics, as well as access to new customers. Additionally, the deal will enhance RPM’s coverage of Victoria by enabling more efficient resource utilization.
The cultural and operational alignment between RPM and Chapel Corner Tyres played a crucial role in the decision to pursue this acquisition. The existing management team of Chapel Corner Tyres will be retained, ensuring a seamless integration process.
RPM CEO Clive Finkelstein expressed enthusiasm about the acquisition, emphasizing the strategic fit and the opportunities it presents. Finkelstein stated, “This is a great acquisition for RPM that meets our strict criteria for best-in-class service, industry knowledge, and a strong cultural alignment with the RPM Group. Chapel Corner Tyres has a great reputation for customer service honed over nearly half a century, which we can leverage across our national network. We look forward to welcoming the high-caliber team along with their resources and warehousing capability, which will strengthen our wholesale platform initially in Victoria and then nationally. In addition, our aligned strategic ambitions will strengthen our competitive position.”
The acquisition of Chapel Corner Tyres represents a significant step forward for RPM Automotive Group Limited, allowing them to expand their presence in the wholesale tyre market and further solidify their position as a key player in the Australian automotive aftermarket sector.
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