Car and truck dealership business Automotive Group Holdings Ltd (ASX: AHG) today announced the acquisition of three Perth-based Mercedes Benz passenger and van dealerships for consideration of $58 million.
Automotive Holdings Group has around 150 dealerships under its control nationwide that between them retail 12 of the 13 most popular passenger vehicle brands in Australia. The Mercedes brand is a market leader in the prestige sector for a business that continues to travel on an impressive growth trajectory.
The stock hit a record high of $4.68 in late May, but has fallen in tandem with the wider S&P / ASX 200 (Index: ^AXJO) (ASX: XJO) since then and now selling for $3.93 it is on around 13x annualised operating earnings per share for financial year 2015.
Over the past five years the business has delivered a total shareholder return (TSR) of 135% – an amount that demolishes the S&P / ASX 200's return of 54% over the same period.
The group is also Australia's largest refrigerated transport logistics provider with plans to grow into that sector as a competitor to other operators in the space such as Lindsay Australia Limited (ASX: LAU).
Another area the group competes in is the automotive parts distribution business that may put it in competition with the fast-growing Burson Group Ltd (ASX: BAP). Burson has been on a shopping spree itself recently announcing the proposed acquisition of Metcash Limited's (ASX: MTS) automotive businesses for $275 million. The businesses to be acquired from Metcash include the Autobarn, Autopro, Carparts, ABS and Midas brands as well as around 3,000 other aftermarket customers.
Automotive Holdings has $79 million of cash and cash equivalents sitting on its balance sheet to fund the WA acquisition and other growth opportunities and looks a reasonable prospect to keep performing well.
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