DWT generates $6.5 million in revenue and is forecast to provide an annual EBITDA contribution of $450,000 – making it a key part of RPM’s growth strategy, focused on expanding the business through accretive acquisitions.
Commenting on the acquisition, RPM chief executive officer Clive Finklestein said Direct Wholesale Tyres was the perfect bolt-on business for RPM Automotive Group.
“Value and earnings per share accretive”
“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.
“Direct Wholesale Tyres is on point strategically. For example, the business has just experienced two of its strongest months of sales in the company’s history, proving the resilience and strength of its business model in these volatile trading conditions.
“In addition, this acquisition will be value and earnings per share accretive and has been funded from our recent strategic investment.
“We continue to evaluate further bolt-on and strategic acquisitions in line with RPM’s focused growth strategy.”
RPM will pay $1.7 million for DWT, split 60% in cash and 40% in RPM ordinary shares (escrowed for 12 months from the issue date) at an issue price equivalent to the weighted average share price over the previous 60 days.
Consideration will be paid 60% on completion and the balance on October 1, 2022.
Opened in July 2007, DWT is in the Townsville Distribution Precinct with triple road train accommodation.
The two key personnel at DWT bring a combined 44 years of experience within the tyre industry, with its manager having extensive experience in commercial tyre wholesale, distribution and retreading.
As one of RPM’s biggest customers in the region, through the company’s sub-distributor/direct-ship container order business, RPM will benefit from DWT’s brand profile and product acceptance in the area.