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One of Australia's pioneers in novated leasing will be acquired by competitor FleetPartners (ASX: FPR) after the listed company announced the purchase of fellow Melbourne group Remunerator in a deal worth up to $40 million.
The deal comes as FleetPartners reports a $75 million net profit after tax (NPAT) for the year to 30 September, down just 3 per cent in a "challenging year" for the company where operational streamlining led to $6 million in annualised cost savings.
The purchase of Remunerator, founded by its sole director and managing director Matthew Honan in 1991, includes an upfront payment of $31.4 million and a further $8.6 million that is mostly subject to performance over the next two years.
$1 million of the deferred and contingent consideration depends on whether the current electric car discount legislation continues or not.
The acquirer claims the acquisition, representing a 5.9x multiple on annual EBITDA to 2025 September, introduces new salary packaging capability while strengthening FleetPartners' competitive position in the novated leasing market.
"Remunerator delivers a full-suite salary packaging platform underpinned by proprietary technology, supported by a long-standing customer base and a strong service reputation," FleetPartners said in an announcement to the ASX this morning.
"The acquisition broadens FleetPartners’ product and system capability, expanding growth channels and engagement opportunities with both existing and new customers."
The purchase will be funded from existing cash and debt facilities, and is expected to be low single-digit earnings per share (EPS) accretive on a pre-synergy basis.
FleetPartners only reported slight growth of 2 per cent in assets under management to $2.3 billion over the year, mostly due to a 16 per cent reduction in new business writing (NBW) which stood at $778 million.
However, the company notes the cut in NBW was largely driven by an unwinding in its elevated order pipeline, and would have been down just 6 per cent otherwise.
Other influencing factors included "subdued economic environment across Australia and New Zealand", as well as the now resolved impacts of a change in its systems which had a temporary negative impact of $41 million and increased debt.
The "Accelerate system cutover" also required a planned two-week blackout period for final system migration work to be completed, during which time vehicles could not be delivered and lease orders could not be taken in Australia.
FleetPartners shares are up 3.15 per cent at $2.95 this morning at the time of publication, giving the group a market capitalisation of $638 million.
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