Industrial and automotive supplies company Stealth Global Holdings (ASX: SGI) has secured some of Australia’s largest companies as new clients as part of a $4.2 million acquisition of Skipper Transport Parts, and its 1,250 customers.
At present, Skipper is an operating division within AMCAP, a subsidiary of Eagers Automotive Limited (ASX: APE), Australia’s largest automotive retail group.
The acquisition will include branch store locations in Perth, Albany, Esperance, Karratha, and Port Hedland. Additionally, it will also include onsite stores operations at several customer locations across Western Australia and Queensland. $3.7m of inventory is also included in the transaction with products for Industrial Maintenance, Repair and Operating (MRO), Automotive, Truck & Trailer, Mining, Bus and Agriculture.
Upon completion of the acquisition expected to settle by 31 July 2021, Stealth forecasts the Skipper Transport Parts business to deliver Revenue of $18.0m and EBITDA of $1.1m within the first 12 months while cross-sell and upsell synergies are realised from existing operations.
“The acquisition of Skipper Transport Parts fits Stealth’s stated strategy to expand its business through disciplined organic and acquisition growth plan,” said Stealth Group Managing Director, Mike Arnold.
“The STP purchase and merger is transformational in terms of a significantly expanded product and high-touch solutions offering, distribution supply chain infrastructure, eCommerce platform and deeper customer and supplier relationships.
Importantly, comprehensive value is created by offering our customers an endless assortment of brands, products and solutions that deliver better customer experiences with more touch points instore, onsite, online, click & collect and delivery options, supported by experienced sales, service, technical and distribution professionals.”
Total consideration for the acquisition comprises of $3.25m cash paid upfront, to be followed by $0.95m within 90 days of settlement. This represents a purchase multiple of 3.8 times FY21 EBITDA.
Alongside the branches, customer database and inventory, Skipper’s 34 employees will join Stealth which is expected to integrate the acquired assets onto their eCommerce platforms.
Of the 1,250 Skipper customers, some of the biggest include Linfox, Centurion Transport and Qube Logistics with 85% of sales made to business account customers and 15% to cash-paying retail customers.
For the Half-Year ended 31 December 2020, Stealth reported revenue of $30.4m and underlying EBITDA of $2.1m.
“Stealth is well positioned to continue growing its business and capitalise on investment and growth opportunities over coming years, with a focus on capital discipline. This is underpinned by our expanding diversified business portfolio, resulting in a steady flow of recurring sales activity,” said Arnold.
Alfred Chan is an Analyst at Emerald Financial, specialising in ASX-listed small cap companies.
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