AUSTRALIA: Repco buys Alesco automotive units

By just-auto.com editorial team | 15 December 2004

Repco Ltd., Australia and New Zealand's largest automotive parts retailer, has bought the automotive unit of industrial brands company Alesco Corp. Ltd. for $A89.5 million ($US67.8 million).

Repco told Reuters the purchase was consistent with the company's growth strategy, and it would fund the purchase of the Ingram and McLeod businesses through debt and a $A50-$A60 million institutional equity placement.

Ingram markets fuel injection and air-conditioning components to the automotive markets, while McLeod sells motorcycle helmets, clothing and footwear. The units made total sales of A$100 million in the year to May 2004, the report said.

Alesco told Reuters in a separate statement proceeds from the sale would amount to $A90.5 million.

An Alesco spokesperson told the news agency the $A1 million difference between Alesco's sale price and that of Repco's relates to a property site, which Alesco has included in its calculations.

Repco reportedly said the purchase would be immediately earnings per share accretive, while Alesco said the sale would generate a $A32 million net capital profit.

Repco estimated annual cost savings from the combined business of up to $A4.5 million by the end of fiscal 2006, the report added.

Reuters said Repco also reaffirmed its EBITDA (earnings before interest tax, depreciation and amortisation) target of $A76 million to $A80 million for the year to June 2005.

Alesco reportedly said it would use the sale proceeds to reduce debt, leaving its balance sheet "relatively ungeared" and allowing it to pursue other acquisitions.

According to Reuters, Alesco also said talks on key terms for the purchase of Dominator garage and opener business in New Zealand, announced in November, were continuing.