National Tyre & Wheel Ltd (ASX:NTD) shares are up 5% intra-day after it acquired 100% of Statewide Tyre Distribution Pty Ltd for $8.875 million.
Notably, the acquisition will add about $20 million to group revenue on a full year basis.
The acquisition price represents an FY18 EBITDA multiple of 5x and the acquisition is forecast to be immediately earnings accretive by 8.4%.
Leading wholesaler of passenger, van and truck tyres
Statewide is a leading wholesaler of passenger, van and truck tyres based in Adelaide with customers in South Australia, New South Wales and the Northern Territory.
It sells a wide array of brands sourced mainly from suppliers based in China.
It supplies less expensive products than NTD’s existing wholesale businesses and also operates in the truck and bus tyre segment, a category in which NTD is seeking to expand.
Significantly, Statewide is debt-free and it does not have many existing customers in common with NTD.
Supplier for over 25 years
NTD’s CEO Peter Ludemann said: “Statewide has built a business over 25 years and it now has a diverse supplier and customer base, a wide range of products and delivers outstanding customer service to tyre retailers.
“Most of Statewide’s customer base will be new to NTD. Statewide will continue to operate as a separate business within the NTD group.
“We look forward to working with the existing Statewide team to further enhance that service.”