The AMA Group Ltd (ASX:AMA) share price falls on divestment plan failure

AMA Group Ltd (ASX:AMA) restructure plans were blocked by the ATO today.

| More on:
a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Shares in vehicle aftercare and accessories company AMA Group Ltd (ASX: AMA) fell 3% to $0.95 on Friday, after an adverse ruling from the Australian Taxation Office blocked the proposed divestment of its vehicle panel repair business.

In April, the company announced the demerger of its components, accessories and procurement business into an independently listed entity, and the purchase of the post-demerger AMA Group, including vehicle panel repair, by private equity asset manager Blackstone for $508 million.

The demerger was intended to allow the two divisions to adopt the most convenient capital structure and focus on their core competencies. In the first half of FY18, the panel repair business accounted for $198 million of the group's revenue versus $27 million of the other units.

A demerger tax relief that was a necessary condition to proceed with the deal was refused today by the ATO. AMA expressed disappointment for the unexpected decision, but noted that the business had continued to perform strongly.

Despite a good result in the six months to December 31, with EBITDA up 27% on the previous corresponding period, shares in AMA are stuck where they were one year ago, underperforming industry peers like ARB Corporation Limited (ASX: ARB) and Bapcor Ltd (ASX: BAP), up 47% and 29% respectively over the same period.

Motley Fool contributor Tommaso Autorino has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Bapcor. The Motley Fool Australia has recommended ARB Limited. 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.

More on ⏸️ Investing

Close up of baby looking puzzled
Retail Shares

What has happened to the Baby Bunting (ASX:BBN) share price this year?

It's been a volatile year so far for the Aussie nursery retailer. We take a closer look

Read more »

woman holds sign saying 'we need change' at climate change protest
ETFs

3 ASX ETFs that invest in companies fighting climate change

If you want to shift some of your investments into more ethical companies, exchange-traded funds can offer a good option

Read more »

a jewellery store attendant stands at a cabinet displaying opulent necklaces and earrings featuring diamonds and precious stones.
⏸️ Investing

The Michael Hill (ASX: MHJ) share price poised for growth

Investors will be keeping an eye on the Michael Hill International Limited (ASX: MHJ) share price today. The keen interest…

Read more »

ASX shares buy unstoppable asx share price represented by man in superman cape pointing skyward
⏸️ Investing

The Atomos (ASX:AMS) share price is up 15% in a week

The Atomos (ASX: AMS) share price has surged 15% this week. Let's look at what's ahead as the company build…

Read more »

Two people in suits arm wrestle on a black and white chess board.
Retail Shares

How does the Temple & Webster (ASX:TPW) share price stack up against Nick Scali (ASX:NCK)?

How does the Temple & Webster (ASX: TPW) share price stack up against rival furniture retailer Nick Scali Limited (ASX:…

Read more »

A medical researcher works on a bichip, indicating share price movement in ASX tech companies
Healthcare Shares

The Aroa (ASX:ARX) share price has surged 60% since its IPO

The Aroa (ASX:ARX) share price has surged 60% since the Polynovo (ASX: PNV) competitor listed on the ASX in July.…

Read more »

asx investor daydreaming about US shares
⏸️ How to Invest

How to buy US shares from Australia right now

If you have been wondering how to buy US shares from Australia to gain exposure from the highly topical market,…

Read more »

⏸️ Investing

Why Fox (NASDAQ:FOX) might hurt News Corp (ASX:NWS) shareholders

News Corporation (ASX: NWS) might be facing some existential threats from its American cousins over the riots on 6 January

Read more »