Stealth (ASX:SGI) to acquire Skipper Transport Parts for $4.2M

• Stealth Holdings’ (SGI) wholly owned subsidiary, Heatley Sales, is acquiring the business assets of Skipper Transport Parts for $4.2 million
• $3.25 million will be paid in cash on the completion date, with the remaining balance payable in cash 90 days after the complete date
• The acquisition will be funded through debt facilities provided by Commonwealth Bank, with the transaction expected to be completed by July 31, 2021
• SGI will also acquire branch store locations across WA and Queensland, along with 34 employees, around 1250 customer and roughly 300 suppliers, plus around $3.7 million worth of inventory
• Company shares are up 13.2 per cent, trading at 10.8 cents

Stealth Holdings’ (SGI) wholly owned subsidiary, Heatley Sales, us acquiring the business assets of Skipper Transport Parts for $4.2 million.

Skipper is a distributor of industrial maintenance, automotive, truck and trailer, mining and agriculture products. It is currently an operating division within AMCAP, a subsidiary of Eagers Automotive, Australia’s largest automotive retail group.

The acquisition will be funded through debt facilities provided by Commonwealth Bank, with the transaction expected to be completed by July 31, 2021.

$3.25 million will be paid in cash on the completion date, with the remaining balance payable in cash 90 days after the complete date, less amounts made for stock adjustments.

Key assets to be acquired through the deal include branch store locations across WA and Queensland, along with 34 employees, around 1250 customer and roughly 300 suppliers. It also includes technology stock systems and websites, with around $3.7 million worth of inventory.

Stealth anticipates Skipper will deliver revenue of around $18 million and EBITDA of $1.1 million within the first 12 months of the transaction being complete, resulting in an estimated purchase of roughly 3.8 times the forecasted EBITDA.

Additionally, Stealth has secured a three-year agreement with AMCAP for the distribution of various genuine and after-market parts, including Ford and Holden in WA.

The company says Skipper is a strategic fit for the company, highly complementary to Stealth’s existing operations.

“Stealth is well positioned to continue growing its business and capitalise on investment and growth opportunities over coming years, with a focus on capital discipline,” said Stealth Group Managing Director, Mike Arnold.

“This is underpinned by our expanding diversified business portfolio, resulting in a steady flow of recurring sales activity.”

Stealth says shareholders will benefit from a larger, stronger, diversified business, giving the company an advantaged market position.

Company shares are up 13.2 per cent, trading at 10.8 cents at 1:25 pm AEST