AMA Group Limited (AMA) today announced it has entered into a binding agreement with Suncorp Insurance Ventures Pty Ltd (Suncorp) to acquire 90% of Capital Smart Repairs Australia Pty Ltd (Capital S.M.A.R.T) based on an implied enterprise value (100% basis) of $420 million. AMA will also acquire 100% of ACM Parts Pty Ltd (ACM) from Suncorp for $20 million, concurrent with the Acquisition.
The transaction is expected to deliver double-digit EPS accretion in the first full-year of ownership (FY21) on a pro-forma basis (inclusive of $17 million of annual synergies, excluding transaction and integration costs and acquisition related amortisation) based on current broker consensus forecasts for AMA.
Owned by Suncorp (under joint venture) since 2010, Capital S.M.A.R.T specialises in low to medium severity repairs in metropolitan areas in Australia and New Zealand. Capital S.M.A.R.T operates under a long-term service agreement with Suncorp Group Limited, the second largest motor insurer in Australia, providing repair volumes under the Motor Repair Services Agreement (MRSA). Capital S.M.A.R.T’s revenues are currently almost exclusively related to Suncorp policyholder repairs. Capital S.M.A.R.T has 50 sites across Australia and in FY19 serviced over ~179,000 vehicles.
ACM is a national automotive parts supplier selling original, recycled and independently certified parts to both the motor repair industry and the general public. ACM’s largest customers include Capital S.M.A.R.T and AMA.
AMA expects annual synergies of approximately $17 million per annum which are expected to be fully implemented by the end of FY21. One-off synergy implementation costs are estimated to be approximately $15 million.
AMA CEO Andy Hopkins said, “The acquisition of Capital S.M.A.R.T represents a strategically compelling and highly attractive opportunity for our customers and shareholders. We are excited to combine Capital S.M.A.R.T’s best-in-class capabilities in low to medium severity panel repairs with AMA’s industry leading platform across the smash repair market. The Acquisition further strengthens our long standing close relationship with Suncorp which, in addition to committing to a 25.5 year service agreement with Capital S.M.A.R.T, is joining us as a partner in the business.”
“The Acquisition will provide the opportunity for shareholders to benefit from significant EPS accretion and the creation of an industry leading platform to pursue further growth.”
“We are looking forward to welcoming the impressive team at Capital S.M.A.R.T into AMA. Through the transaction process we have had the opportunity to spend considerable time with senior management as well as meet some of the highly capable operational team members. It was clear during this process that there is a very strong cultural alignment between Capital S.M.A.R.T and AMA. We believe that the combined AMA/Capital S.M.A.R.T group will open significant career opportunities for team members in both organisations.”
Suncorp CEO Steve Johnston said, “We look forward to working closely with AMA as an ongoing partner, and to maintaining a high level of service to Suncorp’s customers. This agreement builds on our long-standing relationship with AMA.”