It's been a big week so far for the Carsales.com Ltd (ASX: CAR) share price. Not that you would know it from looking at Carsales shares this week. The ASX 200's online classifieds company's shares haven't moved an inch since last Friday when Carsales closed at $20.76 a share.
This is because the company requested a trading halt yesterday before market open. As we covered at the time, this was initially gazetted as a capital raising endeavour. We found out more soon after market open.
Carsales announced that it was intending to raise $1.207 billion from the placement of new Carsales shares. Eligible existing retail and institutional shareholders will be able to subscribe to one new Carsales share for every 4.16 shares owned for the price of $17.75.
The proceeds raised from this offer will fund the acquisition of the remaining 51% of Trader Interactive that Carsales does not yet own.
Trader Interactive is a US-based platform that is a market leader in recreational vehicles, powersports, commercial trucks, and equipment.
How does the Carsales share price react to acquisitions?
We have yet to see how the Carsales share price will react to this latest news. The shares have not yet resumed trading, which won't happen until tomorrow.
Carsales bought its initial 49% stake in Trader Interactive back in May 2021. Back then, the company raised $600 million from a prior capital raising program. So let's look at what has happened to the Carsales share price when the company has made acquisitions in the past.
Carsales' last acquisition was that initial stake in Trader Interactive, announced on 12 May 2021. Investors initially reacted sceptically at the time, with the Carsales share price dipping from more than $19 on 11 May to $17.63 by 21 May.
On the day that Carsales returned from that trading halt (17 May 2021), its shares fell 7%. But a month later, the shares were back to around $19.50. By September 2021, they had risen to Carsales' 52-week high of $26.67 – a high watermark that still stands today.
So the last time Carsales halted its shares for an acquisition, it seemed to be 'dip, then pop'. There's no guarantee this will happen this time too, but it's an interesting case study.
Before this, Carsales' last major acquisition was the 2017 decision to buy the remaining 51% stake of South Korea's Encar.com for $244 million. Back then, the Carsales share price also reacted positively and gained around 11% in the month following the acquisition.
We shall have to wait and see what happens to the Carsales share price this time around when the company resumes trading tomorrow.
