Automotive aftermarket parts business Burson Group Ltd (ASX: BAP) has announced the acquisition of the business and assets of Opposite Lock for a sum of $12 million.
So What: Burson Group recently announced the acquisition of Metcash Limited's (ASX: MTS) automotive division ("MAH"), which consists of businesses such as Autobarn, Autopro, ABS and Midas, for a grand total of $275 million.
However, it also referred to a potential increase in the purchase price if MAH were to complete a specified acquisition upon Burson's approval. In an announcement to the market this morning, Burson Group advised that it has agreed with MAH to acquire Opposite Lock, which is an Australian-wide 4WD specialist consisting of 53 franchise stores and two company-owned stores.
The $12 million payable by Burson is in addition to the $275 million already spent on MAH and will likely comprise of an up-front payment of $8 million with the remaining $4 million contingent on an earnout. Notably, this was already accounted for in the group's recent capital raising.
In relation to the transaction, Burson's Managing Director and CEO Darryl Abotomey said: "The acquisition of Opposite Lock positions the MAH business in the growing SUV and 4×4 segment, and will enable the Opposite Lock business to leverage MAH's existing infrastructure and store network to promote further growth. Burson is pleased to support MAH in this exciting opportunity."
Now What: Burson Group listed on the ASX in 2014 and has generated enormous returns for shareholders in the time since. The automotive aftermarket parts industry is experiencing strong and predictable growth and Burson Group led by a competent management team is doing all it can to ensure it is in the box-seat position to benefit. At $3.39 per share, Burson Group could be a great pick-up for your portfolio.
