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Eagers Automotive (ASX: APE) is investing more than $1 billion for a majority stake in CanadaOne Auto, one of the largest car dealerships in Canada, paving the way for the Brisbane-based group’s previously flagged ambitions to expand offshore for the first time.
The deal, which is being partially funded through a $502 million capital raise, will see Eagers acquire a 65 per cent stake in CanadaOne Auto in a deal that places an enterprise value of $2.7 billion on the Canadian car dealership.
CanadaOne founder Pat Priestner will retain 35 per cent of the business which Eagers says will be “mid-teens accretive” on a pro forma basis on the company’s FY25 performance, before taking into account any synergies between the operations.
The acquisition has been announced in tandem with Mitsubishi Corporation buying a 20 per cent stake in Eagers Automotive’s used-car business, Easyauto123, for $70 million.
Proceeds of the deal, which will also see Mitsubishi acquire an indirect interest in Eagers’ majority holding in Carlins Automotive Auctioneers, are being applied to the CanadaOne acquisition.
“Our objective has been to secure international growth in the best market with the best partner,” says Eagers Automotive’s CEO Keith Thornton.
“To us, the best partner needed scale through a track record of profitable growth, deep industry experience, extensive industry talent, high quality brand partnerships and a clear, material growth runway ahead of them.
“We believe we have found all these qualities in CanadaOne.”
Thornton describes Priestner as a “legendary entrepreneur” in the Canadian automotive industry with his business operating 42 dealerships across the country.
“We are excited to work in partnership to accelerate all aspects of our combined growth strategy within the highly attractive and fragmented Canadian dealer market,” he says, adding there is “plenty of room” to accelerate CanadaOne’s track record of growth.
The $1.043 billion acquisition, which comes off the back of a record half-year profit performance by Eagers, will be funded through a combination of cash, debt and the new capital.
The capital raise comprises a $452 million one-for-12 entitlement offer at an issue price of $21 per share and a $50 million placement with Mitsubishi Corporation at an issue price of $18 per share. This compares with yesterday’s closing price of $29.38 for Eagers shares, ahead of a trading halt on the stock today.
On completion of the deal, Eagers will have an equity interest of 55 per cent indirectly in the CanadaOne operating companies, while Priestner will have a 30 per cent stake and the dealer equity partners and other minority shareholders will hold 15 per cent.
Eagers will also hold a 65 per cent interest in the CanadaOne freehold property-owning companies alongside entities associated with Priestner.
"Since founding CanadaOne over 20 years ago, I have worked hard with my team and our dealers to make CanadaOne the best place for Canadians to buy their new car,” says Priestner.
“We are proud that CanadaOne dealers report significantly higher new car sales compared to industry averages and while we see plenty of opportunities for growth, we believe we can accelerate them in partnership with Eagers Automotive.
“I am not planning on slowing down and when Eagers approached our business we saw a potential partner that shared our vision, our values and culture and who had a track record that presented a compelling partnership opportunity.
“My significant stake in Eagers Automotive demonstrates the confidence I have in this being a game-changer for CanadaOne and Eagers."
The sale price represents a multiple of 6.7x adjusted EBITDA over the last 12 months and a 7.5x multiple of profit before tax for the CanadaOne operating companies.
The deal is expected to settle in the first quarter of 2026, subject to regulatory approvals.
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