- RPM Automotive Group (RPM) acquires Direct Wholesale Tyres (DWT), expanding the company’s distribution footprint in Far North Queensland
- The company will pay a $1.7 million consideration for the acquisition, comprising 60 per cent cash and 40 per cent ordinary shares in RPM
- RPM says DWT will add scale to its existing operations and will be value and earnings per share accretive
- Shares are down 6.6 per cent at 35 cents each at 3:45 pm AEST
RPM Automotive Group (RPM) is set to acquire Direct Wholesale Tyres (DWT), expanding the company’s distribution footprint in Far North Queensland.
The company will pay $1.7 million for the business, comprising 60 per cent cash and 40 per cent ordinary shares in RPM, at an issue price equivalent to the weighted average share price over the previous 60 days.
RPM said the acquisition strongly aligned to its growth strategy, which included expanding the business through accretive acquisitions.
Accordingly, DWT reportedly generated $6.5 million in revenue in the 2021 financial year and is forecast to make an annual contribution of $450,000 to RPM’s new operation.
In this way, the company said DWT would add scale to its existing operations and would ensure the company’s new distribution centre in Townsville serviced existing and new customers.
Commenting on the transaction, RPM CEO Clive Finkelstein said DWT was the perfect “bolt-on” business for RPM Automotive Group, given its growing presence in Far North Queensland.
“With our recent investment in the region and our growing customer base and market share, Direct Wholesale Tyres will add regional scale while also increasing the use of our new Townsville distribution facility,” he said.
“A key part of our focused growth strategy centres around RPM Automotive Group acquiring quality local businesses in the commercial and industrial sectors of the tyre industry to add scale and further value through revenue synergies from cross-selling products, and cost synergies achieved through the greater group.”
Mr Finkelstein added the acquisition would be value and earnings per share accretive and was funded from RPM’s recent strategic investment.
“We continue to evaluate further bolt-on and strategic acquisitions in line with RPM’s focused growth strategy,” he said.
On Monday, shares were down 6.6 per cent at 35 cents each at 3:45 pm AEST.