Carsales.com announces $1.2 billion raise to fully acquire Trader Interactive

Vehicle classifieds company Carsales.com (ASX: CAR) has announced a $1.2 billion raise in a bid to take full control of US-based RV and powersports marketplace platform Trader Interactive (TI).

Nine months after taking a 49 per cent stake in the Virginia-headquartered business, Carsales.com managing director and CEO Cameron McIntyre is bullish about its prospects, so much so that he's willing to dilute almost a quarter of the existing capital to complete the buyout.

CAR has launched an equity raise at $17.75 per share for investors, representing a 14.5 per cent discount to the last closing price on Friday.

The remaining 51 per cent of TI will be purchased for US$809 million ($1.17 billion), representing a major lift on the US$624 million ($797 million) for the other half half. 

The latest investment gives TI an enterprise value of $2.7 billion.

"During the course of the last 12 months we have become even more excited about the value of the Trader Interactive business and its growth potential,” McIntyre said.

“Moving to 100 per cent ownership will enable shareholders to capture the significant upside potential in that business.”

“The acquisition is expected to generate attractive financial returns for shareholders with low double-digit EPS accretion in year one.”

Founded in 2010, Trader Interactive owns a plethora of lifestyle vehicle marketplaces that connect buyers, sellers and renters in the powersports, RVs, aircraft, marine, commercial vehicle, and heavy equipment industries. The company is based in Norfolk, Virginia and has approximately 350 employees.

TI’s platforms, which collectively reached more than 22 million monthly unique visitors last year, generated adjusted revenue of $180 million and adjusted earnings of $99.7 million in FY21.

CAR said the company, which currently has a 6 per cent market share in Australia, has delivered double-digit revenue and earnings over the last five years.

According to CAR, the US non-automotive market is 16 times larger than its Australian counterpart and is double the size of the Australian automotive market.

“The acquisition is a natural evolution of our international growth strategy into large, attractive markets. We have demonstrated an excellent track record of delivering strong shareholder value by diversifying in international markets,” McIntyre said.

Trader Interactive CEO Lori Stacy said the company has thoroughly enjoyed working with Cameron and the carsales team over the last twelve months.

“Trader Interactive is a great business with a proud history and we are incredibly excited about the value that we can generate by leveraging carsales’ product and technology capability,” Stacy said.

“This will enable us to increase the immense value we already provide for our customers. We are thrilled to join the carsales Group and look forward to a strong future together.”

The acquisition is subject to various conditions, which are expected to be satisfied by Q1FY23.