RPM Automotive Group Ltd (ASX:RPM) has acquired two Victorian tyre businesses, Elite Tyre Group (ETG) and Super Tyre Mart (STM), which will be integrated into RPM’s Wholesale Tyre Division and its Repairs and Roadside Division respectively from July 1, 2021.
This is the second acquisition since the completion of RPM’s $5.1 million capital raising in January, enabling the company to advance operations together with providing working capital and funding for potential new opportunities.
RPM says ETG, based in Kealba, and STM, based in Ravenhall, are culturally and operationally aligned, with the management of the acquired businesses to be retained.
Potential to add value
Chief executive officer Clive Finklestein said: “Having raised capital to fund the company’s growth, I’m delighted to welcome Elite Tyre Group and Super Tyre Mart into the RPM fold.
“These two businesses are operationally and culturally aligned with RPM, and we see attractive potential to add value to both businesses through revenue synergies from cross-selling products and cross-pollinating customers, and cost synergies from the scale benefits of a larger group.
“Importantly, these acquisitions are value and earnings per share accretive before synergies, and comfortably funded, supporting further sustainable growth.
“We continue to evaluate further bolt-on and strategic acquisitions in line with RPM’s focused growth strategy.”
ETG’s distribution capabilities across Australia
ETG is a tyre and wheel wholesaler based in Melbourne, with distribution capabilities across Australia.
It is the exclusive distributor of a number of PCR (passenger car tyre) brands, including Imperial Tyres, Aptany Tyres and Kinforest Tyres.
The company can supply passenger tyres from 12 inches to 22 inches in size, with the range focused on passenger tyres, high-performance tyres, SUV and 4WD tyres.
Strong strategic rationale
The acquisition of ETG is strongly aligned with RPM’s goal of expanding the group’s tyre wholesale and distribution platform.
Around $250,000 of efficiency synergies are expected from integrating ETG with RPM’s other Tyre Wholesale Businesses.
In addition, potential revenue synergies from cross-pollinating customer bases and cross-selling ETG’s product range are expected.
Conditions precedent to completion
The sale and purchase agreement contains standard conditions precedent for completion, and RPM anticipates completing the acquisition on or around June 30, 2021.
RPM’s growth strategy remains on course, with organic business growth exceeding budget and further potential acquisitions in the pipeline.