Cash-flush automotive group Motus has acquired aftermarket parts business Motor Parts Direct in a bid to reduce the group’s dependence on vehicle sales amid an international shortage of semiconductor chips.
The offshore takeover, which has satisfied all conditions precedent, is aligned to Motus’s international growth strategy for its aftermarket parts business and will provide economies of scale, group procurement benefits and synergies, the company said in a statement on Monday.
“Motus’s wholly owned UK-based subsidiary Motus Holdings (UK) has entered into a sale and purchase agreement dated September 30 to acquire 100% of the issued share capital of Motor Parts Direct,” Motus said.
The automotive group said the £182m (R3.6bn) consideration for the purchase of the shares would be funded using available cash and banking facilities and paid on October 3.
Motus sells new and preowned cars through its network of more than 300 dealerships in SA, which took a knock in the initial stages of the coronavirus pandemic lockdown. Its operations also straddle the UK and Australia while it also has a presence in Asia. The deal will give the group more access to hard currency.
Family owned UK-based Motor Parts Direct is a business-to-business parts distributor that focuses on supplying primarily to the passenger and light commercial vehicle sector, to workshops in and around the UK.
The 23-year-old company with 175 branches in the UK has a wide and active customer base of more than 14,000 and employs 1,700 workers. On June 30 it had a tangible net asset value of £30m yet none of its properties was purchased as part of the acquisition.
“The business is cash generative and asset-light,” said Motus. “The existing management team, excluding any members of the family, are committed to remain and grow the business. Motus said that key management has been secured to take the business forward.
The global chip supply shortage as a result of the pandemic in 2020 has resulted in new vehicle production falling. However, research by JPMorgan pundits suggests the problem will start easing in the second half of 2022.
By 2pm on Monday, Motus’s share price had risen 0.56% to R115.41, having climbed nearly 15% since the year began, according to Infront data.
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