MTO expands electric vehicle crusade, acquires Mojo for $60 million

As more and more companies expand their portfolios to include more sustainable and eco-conscious offerings, Motorcycle dealership company Motorcycle Holdings (ASX: MTO) is not about to be left behind. The Company has acquired one of Australia’s largest motorcycle and electric vehicle importers and distributors, the Mojo Group, for $60 million. 

Melbourne-based Mojo Group is a motorcycle, scooter, ATV (all-terrain vehicle), electric motorcycle and genuine spare parts and accessories importer and distributor operating in Australia and New Zealand that began as a side hustle for two university students. Today, it boasts a 150-strong dealer network and a 5,000-square-metre distribution centre, backed up by a 2,000-square-metre facility in Yatala (Queensland) to increase total warehousing capacity to 2,500 vehicles. 

This acquisition will help MTO diversify into a new market: motorcycle importing and distribution. It also expands the Company’s portfolio to ATV and electric motorcycle segments. In FY22, MTO expects this partnership to increase its revenues by more than 27% to approximately $580 million. It also expects profit to increase by over 40% to $46 million on a pro forma consolidated basis. No doubt, it will also help Mojo expand its customer base.

According to MTO’s managing director and founder, David Ahmet, this acquisition makes “strategic sense”. He said, “We believe the acquisition of the Mojo Group will present significant growth opportunities by introducing the importation and distribution of motorcycles, ATVs, and scooters (including electric models) into our existing product offering, increasing our warehouse capacity and expanding our distribution network.”

Getting into the finer details of the deal, the $60 million acquisition will include $30 million in MTO shares ($2.60 issue price, escrowed for two years), $20 million in cash and deferred consideration of up to $10 million . The Company will fund the cash component of the consideration through an increase to its debt facility. The acquisition price represents an earnings that is 4.1 times Mojo Group’s FY22 net profit before tax. On a proforma FY22 consolidated basis, the transaction is expected to be 18% earnings per share accretive before synergies, integration costs and PPA related amortisation.

Mojo CEO Michael Poynton and director Joshua Carter—who started Mojo when they were still studying at university—will be holding senior executive positions with MTO. Poynton will also join the MTO board. Conditions to completion of the acquisition include MTO obtaining shareholder approval for the issue of the Consideration Shares at the AGM and obtaining key contract and third-party consents. MOJO owners will represent 16% of the shareholders of MTO, receiving approximately 50% of the sale consideration as MTO shares (escrowed for 2 years).

Ahmet added that the Company will keep exploring other motorcycle franchise acquisition opportunities to increase its market share and reach in Australia. 

This deal is set to be completed by October 31, 2022.