RPM Automotive Group (ASX:RPM) acquires two tire companies – The Market Herald
- RPM Automotive Group (RPM) acquires two tire companies, Victoria Wide Tire Service (Vic Wide) and ACT Total Tires (ACT Tyres), expanding its Repairs and Roadside division
- RPM will pay a total of $7.67 million to acquire the two companies and is expected to generate over $43 million in sales while RPM achieves over $100 million in sales on an annualized basis
- Acquisition of Vic Tires expected to close on May 1
- RPM shares are up 3.70%, trading at 28 cents
RPM Automotive Group (RPM) has acquired two tire companies, Victoria Wide Tire Service (Vic Wide) and ACT Total Tires (ACT Tyres), expanding its Repairs and Roadside division.
As part of the acquisition, RPM will pay $6.8 million for Vic Wide, split between 65% cash and 35% RPM stock equivalent to the 60-day volume-weighted average price (VWAP) on the date of the regulation.
50% of the counterpart will be paid on completion and the balance one year later.
For the acquisition of ACT Tires, RPM will pay $870,000, split 50% in cash and 50% in RPM stock at an issue price of 28.1 cents, equivalent to the 60-day VWAP at from April 1.
The consideration will be paid 50% on completion, 25% after one year and an additional 25% after two years.
“With over 70 years of combined experience between Vic Wide and ACT Tires management, they will help RPM continue to provide our customers with above-industry standards of service,” commented CEO Clive Finkelstein. .
“These acquisitions strengthen RPM’s network effect as we increase the number of customers we serve while enhancing our service capabilities.
“Once integrated into the RPM Group, both businesses will provide significant cost synergies and will be immediately accretive to value and earnings per share to create value for our shareholders.”
Mr. Finkelstein also mentioned that the company’s Repairs and Roadside division will now comprise seven businesses, operating from 12 locations and is expected to generate over $43 million in sales while RPM will exceed $100 million in sales. on an annualized basis.
The acquisition of Vic Tires is expected to generate new operational synergies for RPM of more than $350,000 per year and will complete its acquisition on May 1.
RPM has already acquired ACT Tires and is expected to generate earnings before interest, taxes, depreciation and amortization (EBITDA) of $300,000, in line with RPM’s growth strategy.
Shares of RPM rose 3.70%, trading at 28 cents at market close.