The Carsales.Com Ltd (ASX: CAR) share price won't be going anywhere on Wednesday.
This morning, the auto listings company requested a trading halt of its shares.
Why is the Carsales share price on ice?
Carsales requested a trading halt this morning so it could undertake a capital raising to fund a major acquisition.
According to the release, the company has signed an agreement with Brazil's Banco Santander to acquire an additional 40% of Webmotors for approximately A$353 million. Webmotors is the number one automotive digital marketplace in Brazil.
This agreement will see Carsales increase its stake in Webmotors to 70%, with Banco Santander retaining a 30% stake.
The release also notes that Webmotors and Banco Santander will continue their valuable contractual relationship, with the bank continuing to be the credit and financial solutions partner for finance and insurance transactions made through the Webmotors platform.
At the same time, Carsales expects that the equity change will allow Webmotors to benefit further from its expertise in digital marketing, customer experience, products, and services within the digital automotive ecosystem.
It believes this will allow Webmotors to strengthen its market position while retaining the strong support of Banco Santander, which is the auto loans market leader in Brazil.
The transaction is expected to be earnings per share neutral in the first full year after completion and accretive thereafter.
Carsales CEO, Cameron McIntyre, commented:
Webmotors is an outstanding automotive digital marketplace business with an innovative culture, a proven track record of strong growth over time and significant opportunities for future growth. Closer alignment to the carsales business makes strategic sense for both carsales and Santander to ensure webmotors' continued long term success and delivery of value to our shareholders. With this acquisition carsales and Santander reverse equity positions in webmotors and maintain Santander's important commercial exclusivity for credit and financial solutions on the webmotors platform.
Capital raising
To fund the acquisition, Carsales is launching a fully underwritten 1 for 14.01 pro-rata accelerated renounceable entitlement offer (institutional and retail) aiming to raise approximately $500 million through the issue of 25.1 million new Carsales shares at $19.95 per share.
This represents an 11.9% discount to the Carsales share price at the close of play on Tuesday.
