SYDNEY, AUSTRALIA: RPM Automotive Group announced the acquisition of another FNQ based business, Direct Wholesale Tyres (DWT).
RPM will pay $1.7 million for DWT, split 60% in cash and 40% in RPM ordinary shares (escrowed for 12 months from the issue date) at an issue price equivalent to the weighted average share price over the previous 60 days. Consideration will be paid 60% on completion and the balance on 1 October 2022.
This business, once the acquisition is completed, will add scale to RPM’s existing FNQ footprint and ensure that the new RPM Distribution Centre in Townsville not only services existing business, but also supports DWT and its associated customers.
Commenting on the acquisition, RPM CEO Clive Finkelstein said: “Direct Wholesale Tyres is the perfect bolt-on business for RPM Automotive Group, given our growing presence in Far North Queensland. With our recent investment in the region and our growing customer-base and market share, Direct Wholesale Tyres will add regional scale while also increasing the use of our new Townsville distribution facility.
“A key part of our focused growth strategy centres around RPM Automotive Group acquiring quality local businesses in the commercial and industrial sectors of the tyre industry to add scale and further value through revenue synergies from cross-selling products, and cost synergies achieved through the greater Group. Direct Wholesale Tyres is on point strategically.
For example, the business has just experienced two of its strongest months of sales in the company’s history, proving the resilience and strength of its business model in these volatile trading conditions.
“In addition, this acquisition will be value and earnings per share accretive and has been funded from our recent strategic investment. We continue to evaluate further bolt-on and strategic acquisitions in line with RPM’s focussed growth strategy.”
Opened in July 2007, DWT is located in the Townsville Distribution Precinct with triple road-train accommodation. The two key personnel at DWT bring a combined 44 years of experience within the tyre industry, with its Manager having extensive experience in commercial tyre wholesale, distribution and retreading.
As one of RPM’s biggest customers in the region, through the Company’s sub-distributor / direct-ship container order business, RPM will benefit from DWT’s excellent brand profile and product acceptance in the area.
The acquisition of DWT is strongly aligned to RPM’s focused growth strategy, which includes expanding the business through accretive acquisitions. DWT generated $6.5 million in revenue for FY21 and is forecast initially to provide an annual contribution of $450k to RPM’s new FNQ operation.