All-in on Trader Interactive
Car buys rest of TI, raising equity
Need to know
- CAR acquiring o/s 51% of Trader Interactive for US$809m
- Raising A$1,207m equity in pro rata entitlement at $17.75/share (1 for 4.16 ratio)
- CAR FY22f adjusted net profit $194-196m, +27- 28% on pcp
Investment implications
Just over one year ago, CAR acquired 49% of US online marketplace platform, Trader Interactive for US$624m and raised A$600m new equity as part of the process. CAR has now moved to acquire the outstanding 51% for US$809m valuing TI at US$1,897m on an enterprise value basis.
CAR will raise A$1,207m equity at $17.75 per new share on a 1 for 4.16 ratio in a fully underwritten pro rat entitlement offer.
CAR will upsize its debt facility to A$1.4 billion (from A$0.9bn) to replace the existing debt facility at TI.
TI is a ‘highly strategic fit’ with CAR’s existing operations and its international growth strategy, according to the company.
The acquisition is expected to generate low double-digit EPS accretion in the first full year of ownership.
TI presents a significant opportunity for CAR to expand in much larger US non-automotive markets utilising its (and TI’s) technology.
CAR has pre-released its (unaudited) FY22 result showing adjusted net profit of $194-196m (+27-28%) on revenue of $507-509m (+16%). Revenue is inline with market consensus, whilst profit is ~3% ahead.
Figure 1: FY22 result (unaudited)
Source: CAR
This commentary reflects our initial view. For detailed reports for companies under Sandstone Insights coverage, see our latest research notes for our investment view and specific risks associated with investing in these companies.
Stock overview
Share price
Company overview
CAR is the largest online automotive classifieds business in Australia. The network has operations across the Asia Pacific region and CAR has interests in classified businesses in Brazil, USA, Mexico, South Korea and Chile.
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