Carsales.com (ASX: CAR) is looking to raise $600 million in order to fund a 49 per cent acquisition of Trader Interactive, a leading automotive marketplace platform in the United States.
Already a leader in the Australian market, Carsales has an option to take control of the company further the down the track.
The raise will go part of the way to funding Carsales' US$624 million (AUD$797 million) purchase of the stake, effectively valuing the US-based company at USD$1.62 billion (AUD$2.07 billion) on a 100 per cent enterprise value basis.
The company expects the deal will generate opportunities to build out its international scale and industry diversification with exposure to attractive verticals in the United States, including across the commercial truck, recreational vehicle, power sports and equipment industries.
"Having held Australian market leading positions in bikes, boats, caravans and truck marketplaces since 2005, the company has developed strong intellectual property and product & technology capabilities that can be leveraged into global markets," says Carsales managing director and CEO Cameron McIntyre.
"This acquisition is expected to accelerate our international growth strategy by providing us with exposure to a significant market in the United States across attractive non-automotive verticals.
"We are excited by the opportunity this investment provides Carsales and look forward to working closely with Trader Interactive in helping them achieve their objectives and delivering shareholder value."
Founded in 2010 in Norfolk, Virginia, Trader Interactive provides digital marketplace solutions for a variety of specialty automotive industries.
The business generated revenue of US$123 million and EBITDA of US$61 million in CY20, and has a track record of delivering earnings growth with EBITDA on a compound annual growth rate basis rising by 13 per cent over the last five years.
It has a diversified customer base of more than 8,500 dealers and 49 original equipment manufacturers.
Melbourne-based Carsales will invest alongside Goldman Sachs, Eurazeo North America, management and employees who collectively own the remaining 51 per cent interest in Trader Interactive.
Under the entitlement offer eligible shareholders can subscribe for one new Carsales share for every 6.99 shares held on the record date of Monday 17 May, with approximately 33.5 million new shares to be issued (representing 14.3 per cent of current issued capital).
The offer will be conducted at $17 per new share, representing a 12.9 per cent discount to the last closing price of $19.51 per share on Tuesday 11 May.Never miss a news update, subscribe here. Follow us on LinkedIn, Instagram and Twitter.
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