Australia’s largest motorcycle dealer MotorCycle Holdings (ASX: MTO) has agreed to buy one of the country’s biggest wholesalers of motorcycles, spare parts and accessories in a deal worth up to $60 million.
The acquisition by Brisbane-based MotorCycle Holdings will see Mojo Group principals Michael Poynton and Joshua Carter take up senior executive positions with MTO, while Poynton will also join the listed company’s board.
MotorCycle Holdings is offering Mojo Group $20 million cash and 11.539 million MTO shares at an agreed issue price of $2.60 per share for the deal. There is a deferred consideration of up to $10 million if Mojo achieves net profit before tax of more than $14.5 million in the 12 months after the acquisition is completed.
The company’s shares shot up close to the agreed price in early trading, despite another day of heavy losses on the share market. The shares peaked at $2.55, shooting 18 per cent higher before settling back to $2.40 at 11.49 AEST.
The MotorCycle Holdings shares issued to Mojo will be placed into escrow for two years and the company plans to fund the cash component of the deal by increasing its debt facility.
Mojo Group imports and distributes genuine spare parts and accessories for motorcycles, scooters, ATVs, electric motorcycles in Australia and New Zealand through a network of 150 dealers.
The Melbourne-headquartered company has a purpose-built 5,000sqm distribution centre in Altona North and a 2,000sqm facility in Yatala on the Gold Coast which gives it total warehousing capacity of 2,500 vehicles.
MotorCycle Holdings managing director and founder David Ahmet says the acquisition makes ‘strategic sense’ for the group.
"We believe the acquisition of the Mojo Group will present significant growth opportunities by introducing the importation and distribution of motorcycles, ATVs, and scooters (including electric models) into our existing product offering, increasing our warehouse capacity and expanding our distribution network," he says.
“In addition, MTO continues to explore other motorcycle franchise acquisition opportunities to increase its market share and geographic coverage in Australia.”
MotorCycle Holdings delivered higher revenue in FY22 despite challenging conditions, although the bottom line fell 18 per cent to $23.1 million.
Motorcycle sales rose 7 per cent by number to 24,413, driving group revenue 7 per cent higher to $462.6 million. The company also lifted its market share to about 12 per cent of national new motorcycle sales during the year, slightly ahead of the 11.9 per cent market share in FY21.
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