Motorcycle Holdings Announces Acquisition of Cassons and Capital Raising

MotorCycle Holdings Limited (ASX:MTO), one of Australia’s largest motorcycle dealership operators, is to acquire Cassons Pty Ltd, a leading, successful wholesaler and retailer of motorcycle accessories and parts.

MTO will acquire the business from the Cassen family for a total of $123.2 million, with consideration of $98.7 million paid in cash and $24.5 million in MTO shares (escrowed for two years).

MTO will fund the cash component of the consideration through debt $35m and a fully underwritten renounceable Entitlement Offer to raise $67million at $3.85 per share.

The acquisition is expected to increase MTO’s annual revenues by approximately 30% to $310 million, with EBITDA doubling to approximately $30 million, before synergies.

In FY17, Cassons generated revenue of $76.5million (FY16 $74.0 million) and a pro forma EBITDA of $16.7million (FY16 $16.6 million). The acquisition price of $123.2million therefore represents an earnings multiple of 7.4 times FY17 pro forma EBITDA, and the transaction is expected to be 26% earnings per share accretive on a FY17 pro forma basis before synergies and amortisation.

The principals of Cassons (Rob and John Cassen) will take up senior executive positions with MTO and Rob Cassen will also join the MTO board.

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