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After fielding a raft of unsolicited inquiries from potential buyers earlier this year, Gumtree Australia Markets (ASX: GUM) has secured a $6.8 million deal to sell its capital markets business which includes the HotCopper platform in Australia and Stockhouse in Canada.
Gumtree, which also owns the GumTree, CarsGuide, AutoTrader and The Market Online platforms, has entered a binding agreement for the sale with UK-based ADVFN, a global group that offers live data and resources for share, forex, commodities and crypto traders.
ADVFN was among 14 parties showing an interest in the business in April and among three that put forward non-binding offers for the Gumtree business.
HotCopper and Stockhouse will join the ADVFN stable that provides investors with advanced tools, market insights and financial forums for discussion and research.
ADVFN, which is listed on the AIM London Stock Exchange, has about 36 million users worldwide and records about a billion page impressions a year.
“The decision to divest the capital markets business has been a difficult one for the board,” says Gumtree’s non-executive chairman Bruce Rathie.
“But the approaches by third parties to purchase the capital markets business prompted a strategic review which led the board to the conclusion that the long-term interests of shareholders were best served with a focus on the much larger Gumtree Group business which has the potential to grow strongly going forward and to drive long-term value.”
Rathis says the rationale for selling the business was to reduce debt, provide working capital and boost the group’s ambitions to explore growth opportunities similar to the content sharing agreement secured in May with New Zealand media company NZME (ASX: NZM) to take its CarsGuide brand across the Tasman.
“The board believes that this simplification of the investment story for the company and the focus on the exciting online marketplace sector with higher profitability levels will make investment in the company more attractive to shareholders and the investment community more broadly,” he says.
The sale to ADVFN has been struck at an enterprise value of $6.8 million, which is payable upfront in cash.
The deal will lead to the repayment of outstanding shareholder loans totalling $2.8 million and a Commonwealth Bank loan of $750,000, while a $1.3 million loan owed to Royal Bank of Canada will be assumed by ADVFN.
The sale will generate $2 million in cash for Gumtree which will cut total group debt by $4.8 million.
After a solid FY24 financial performance, Gumtree posted a 9 per cent decrease in group revenue to $42.5 million in the first half of FY25. However, EBITDA from continuing operations surged 286 per cent to $3.24 million.
The capital markets business suffered a drop in revenue in the first half of FY25 due to lower investor activity.
Gumtree announced in February that it had cut the cost base of the capital markets division which, along with new product initiatives, would deliver a positive impact on its second-half results for FY25.
Following the sale, which settles today, the company plans to focus on its core categories of Motors, Pets, Jobs and Real Estate.
“As part of our ongoing transformation, we continue to streamline operations to focus on our core strengths in advertising and classifieds, and to exit businesses with a higher capital requirement,” says Gumtree Group managing director Tommy Logtenberg.
“ADVFN is recognised as a leader in the development and provision of financial information, and we are pleased that the capital markets business will be part of ADVFN going forward given the strong business fit.
“The divestment will see GUM continue to focus its cash resources on the ongoing development of new initiatives and strategic relationships.
“We are confident that the capital markets business will prosper under the leadership of ADVFN.”
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