Eagers Automotive: Victoria scaled up

About the author:

Scott Murdoch
Author name:
By Scott Murdoch
Job title:
Senior Analyst
Date posted:
11 October 2023, 7:30 AM
Sectors Covered:
Diversified Financials, Professional Services

  • Eagers Automotive (ASX:APE) announced the acquisition of a Victorian dealership portfolio and associated properties for A$245m (A$100m property, A$34m net assets, A$111m goodwill).
  • The portfolio has ~A$1bn turnover (additional ~10% to APE base), representing 12 OEM partners. No earnings information was detailed; however we expect a PBT multiple (goodwill) of ~4.2-4.8x, in-line with previous transactions.
  • The transaction is subject to shareholder approval (related party transaction – Nick Politis), with the EGM and completion expected in early 2024.
  • On a standalone and full year basis, we estimate ~3.8% EPS accretion from the deal. We expect the dealerships to be operating at lower margin (as was ACT) which APE can improve meaningfully over time.
  • There will be periods of cyclicality experienced through time, however we see this scale acquisition as further evidence APE is executing on building a sustainably higher earnings base. Add maintained.

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