What a great deal for AHG. They buy a business for $29 and in doing so monopolise the Ford and Holden parts distribution in WA (previous Coventrys and Amcap were the only distributors in WA), strip that out of Covs and then sell Covs for $45m
I'm surprised the market didn't react more to this announcement. The wording was poor IMO, but the story in The West today appears to spell it out better for shareholders.
See below. from
www.thewest.com.au
UPDATE 2.35pm: Automotive Holdings Group has revived the sale of its Covs auto parts business, striking a $45 million deal with Asia’s biggest after-market parts and accessories group, GPC Asia Pacific.
The announcement comes nine months after AHG pulled out of long-running sale talks over Covs with Burson Group, declaring it was not in the company’s best interests to proceed with a deal.
AHG has only owned Covs for four years, buying it from Coventry Group for $29 million in 2011.
The GPC sale will generate $43 million to $45 million of proceeds and see AHG retain the exclusive distribution of Ford and Holden OEM (original equipment manufacturer) parts in WA.
AHG managing director Bronte Howson said the transaction would create a strategic alliance with the GPC businesses in Australia and New Zealand.
“We believe it is an exciting outcome for both AHG and GPC,” Mr Howson said.
“GPC will become AHG’s preferred supplier for aftermarket parts, equipment and consumables requirements for our 101 passenger and truck dealerships across Australia and New Zealand and for our refrigerated and other logistics businesses.”
Mr Howson said AHG would also become the preferred provider of vehicles for GPC’s national fleet of about 1200 vehicles.
GPC Asia Pacific managing director John Moller said the deal would increase its Australasian trade sales to more than $1 billion.
AHG shares were up nine cents, or 2.16 per cent, to $4.25 at the close.
