Eagers Automotive Ltd (ASX: APE) shares are out of action this morning.
That's because the ASX 200 stock has been placed in a trading halt today as the company launches a major equity raising to fund its expansion plans.
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ASX 200 stock announces big acquisition
This morning, Australia's largest auto dealership has announced plans to acquire a controlling stake in CanadaOne Auto Group. It is one of Canada's largest automotive retail groups.
The transaction marks a bold step in Eagers' international growth strategy, giving the company a strong foothold in the Canadian market.
According to the release, the ASX 200 stock will acquire 65% of CanadaOne for C$1 billion (A$1.09 billion). Current owners, the Priestner Group, will retain a 35% stake.
The purchase will be paid through a mix of cash, shares, and preferred shares that can be exchanged for ordinary shares in the future.
If everything goes to plan, the deal is expected to close in the first quarter of 2026. Though, it remains subject to regulatory approvals in Canada and Australia.
Why is it making this transaction?
Management notes that the deal will expand Eagers' platform into Canada following an extensive global review.
It also feels it is a highly strategic investment, demonstrating strong alignment with its long-term vision and Next100 Strategy. Furthermore, management expects it to be "financially compelling" and immediately mid-teens earnings per share accretive without any assumed synergies.
Equity raising
The ASX 200 stock has announced a A$502 million equity raising (including a A$50 million placement to Mitsubishi Corporation).
The company is seeking to raise A$452 million through a partially underwritten entitlement offer at a 28.4% discount of $21.00 per new share. Whereas the placement to Mitsubishi is being undertaken at a larger discount of $18.00 per new share.
Commenting on the transaction, the ASX 200 stock's CEO, Keith Thornton, said:
Our objective has been to pursue international growth in the best market with the best partner. To us, the best partner needed scale through a track record of profitable growth, deep industry experience, extensive industry talent, high quality brand partnerships and a clear, material growth runway ahead of them. We believe we have found all these qualities in CanadaOne.
CanadaOne's founder Pat Priestner is a legendary entrepreneur in the Canadian automotive industry, and we are excited to work in partnership to accelerate all aspects of our combined growth strategy within the highly attractive and fragmented Canadian dealer market. With our combined OEM brand partnerships, a track record of strong performance in our respective markets and leveraging Eagers' proprietary easyauto123 platform, we believe there is plenty of room to accelerate CanadaOne's already impressive track record of growth.
