What: Shares in salary packaging specialist Smartgroup Corporation Ltd (ASX: SIQ) have rallied around 7% this morning after the group announced that it has entered an agreement to acquire Autopia for $36 million.
So What: According to the ASX release, Autopia is a provider of novated leasing to corporates. Autopia's brand is strong in the corporate market and the company currently manages around 3,000 vehicles.
Importantly for Smartgroup's shareholders, the acquisition looks attractively priced at 6.5 times earnings before interest, tax, depreciation and amortisation (EBITDA) with Autopia expected to contribute around 7% in earnings accretion to Smartgroup on a 2016 calendar year basis.
Now What: Autopia is Smartgroup's fourth acquisition since the group undertook its initial public offering (IPO) in 2014 and is a reminder to investors that the salary packaging, novated leasing and fleet management sectors are ripe for further consolidation.
Bolt-on acquisitions can be a low-risk way to incrementally grow a business and it's not just Smartgroup who stands to benefit from this strategy.
Peers McMillan Shakespeare Limited (ASX: MMS), Eclipx Group Ltd (ASX: ECX) and SG Fleet Group Ltd (ASX: SGF) are all well placed to grow via further sector consolidation too.
With the share prices of these four companies significantly outperforming the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) over the past 12 months, these stocks may not be bargains for value investors, however the positive longer term thematic may still make these four shares attractive to growth investors.
