Digital marketplace for buying and selling cars, bikes, boats, and caravans, Carsales.com [ASX:CAR], has signed an agreement for an additional 40% of Webmotors, the ‘number one automotive digital marketplace in Brazil’.
The acquisition price has been set at R$1,240 million — approximately AU$353 million — and will require an equity raising to fund it.
If successful, Carsales will take an increased stake in Webmotors to 70%, while Santander retains a 30% stake.
CAR’s stock price has been flat this past week, yet so far in 2023 it’s climbed 9%.
Over the last 12 months, CAR has increased its stock price nearly 18%:
Source: TradingView
Carsales ups digital market share in Brazil
Banco Santander and Carsales have already signed an agreement that could see the online vehicle advertiser take an additional 40% of Webmotors, a leading automotive digital marketplace in Brazil.
Carsales will be set back R$1,240 million, or approximately AU$353 million to make the acquisition, but it’ll mean Carsales will grow its stake in Webmotors to 70%, with Santander keeping a 30% stake.
The proposed acquisition price values Webmotors on a 100% EV (enterprise value) basis of R$3,100 million — around AU$883 million equivalent — which represents a full-year 2022 EBITDA multiple of 21.7 times and is expected to be EPS (earnings per share) neutral in the first full year.
Carsales expects that the change in equity will enable Webmotors to use its expertise in digital marketing, customer experience, products, and services — ultimately strengthening Webmotors’ market position with ongoing financial support from Santander, which is also the auto loans market leader in Brazil.
The deal will also improve Webmotor’s dealership offerings, franchises OEMs (equipment manufacturers), and customer base.
Carsales also looks forward to capitalising on a ‘compelling opportunity’ to extend its international strategy by increasing its ownership of the number one automotive digital marketplace in Brazil, the fifth-largest auto market in the world.
Webmotors was noted to have a strong track record of performance, with 23% revenue and 28% EBITDA compound annual growth since 2017.
CEO of Carsales Cameron McIntyre commented:
‘Carsales and Santander have developed a strong working partnership over the last 10 years of joint ownership in webmotors, which is reflected in webmotors’ market leadership in one of the largest and fastest growing car markets in the world. Webmotors is an outstanding automotive digital marketplace business with an innovative culture, a proven track record of strong growth over time and significant opportunities for future growth.
‘Closer alignment to the carsales business makes strategic sense for both carsales and Santander to ensure webmotors’ continued long term success and delivery of value to our shareholders. With this acquisition carsales and Santander reverse equity positions in webmotors and maintain Santander’s important commercial exclusivity for credit and financial solutions on the webmotors platform.’
Carsales has entered into a trading halt today, kicking off its equity raising for funding the acquisition via a $500 million fully underwritten 1 for 14.01 pro-rata accelerated renounceable entitlement offer.
Approximately 25.1 million new ordinary shares will be issued under the Entitlement Offer (at $19.95 per new share) equivalent to approximately 7% of current issued capital.
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