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Bapcor Ltd finalises divestment sales for NZ$99 million

Bapcor Ltd (ASX: BAP) is Australia and New Zealand’s largest auto parts provider. It owns the successful Burson and Autobarn chains.

Over a year ago Bapcor bought the Hellaby business in New Zealand, which was a smaller Kiwi version of Bapcor. So, it made a good fit for an acquisition. However, Hellaby also came with a number of non-car businesses that Bapcor could sell and recoup some cash.

For example, in the first half of FY18 Bapcor sold the Hellaby Footwear and Contract Resources businesses.

Today, Bapcor announced that it has signed an agreement to sell TBS Group. This is a specialist industrial contractor for asset and infrastructure maintenance services.

Bapcor will sell TBS for NZ$35 million on a cash-free debt-free basis. The sale should be finalised by the middle of April 2018.

The sale of TBS is the final part of the divestment program, Bapcor said that the total proceeds of all discontinued operations is NZ$99 million.

Bapcor’s CEO, Darryl Abotemey, said “The divestment of the final non-core asset relating to the Hellaby Holdings Ltd acquisition is in line with Bapcor’s strategy of specialising in the automotive aftermarket. The total proceeds from the divestment program are consistent with Bapcor’s expectations. We wish management and staff of the TBS business all the best for the future and thank them for their support while part of Bapcor.”

Foolish takeaway

Bapcor has done very well out of the Hellaby deal. It can now use this cash to increase the growth of its remaining businesses such as increasing the growth of store counts of its various auto part chains. I think the Bapcor share price is a good medium-term buy trading at around 24x FY18’s estimated earnings.

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Motley Fool contributor Tristan Harrison owns shares of Bapcor. The Motley Fool Australia owns shares of and has recommended Bapcor. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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