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.
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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.