Bapcor (ASX: BAP) has announced it’s acquiring two truck part businesses.
Originally called Burson Group, Bapcor is a specialist auto parts business. What most consumers don’t know is that it’s more than a retailer of spare parts. Its bread and butter is trade services. For example, when you get your car serviced by a mechanic, the mechanic doesn’t store all of the parts for the make and model of your car in their shop. Instead, they rely on a nearby distributor like Burson’s who can deliver the exact parts within a matter of hours.
Bapcor’s Acquisitions
Bapcor has announced that it’s acquiring both Truckline and Diesel Drive.
According to Bapcor, Truckline is a heavy commercial truck spare parts business with 22 branches across the country. Its network is supported by distribution centres in Perth and Brisbane.
Truckline generates revenue of around $100 million with 150 team members. Management made this acquisition to expand its heavy commercial business where it currently has a wholesale presence with its specialty wholesale division.
The other acquisition is called Diesel Drive, it specialises in selling Japanese commercial truck spare parts. It has one location in Sydney and generates revenue of $13 million with 14 staff. This will expand Bapcor’s Japanese commercial truck spare segment having added 15 locations over the past year. Bapcor is aiming for 40 outlets.
These two acquisitions will cost $48 million combined and will be funded through debt. In FY21 they’re expected to achieve a return on investment (ROI) of at least 15% and increase profit per share (EPS).
Bapcor CEO and Managing Director Darryl Abotomey said: “The group is uniquely positioned to provide aftermarket parts to all forms of road transport. Australia continues to be dependent on the logistical services provided by both the heavy and light commercial truck sectors. We see considerable opportunities for Bapcor with further expansion opportunities.”
Bapcor grew its net profit by 14.8% to $97 million in its FY19 result.
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