14/09/2015 - 15:31

From zero to $100m in six years

14/09/2015 - 15:31

Bookmark

Upgrade your subscription to use this feature.

Perth entrepreneur Andrew Hopkins has struck a lucrative deal in the most unlikely of sectors, agreeing to sell his Gemini panel beating business to listed company AMA Group for $100 million.

From zero to $100m in six years
Gemini Accident Repair Centres executive chairman Andrew Hopkins (right) with AMA Group executive chairman Ray Malone.

Perth entrepreneur Andrew Hopkins has struck a lucrative deal in the most unlikely of sectors, agreeing to sell his Gemini panel beating business to listed company AMA Group for $100 million.

The deal comes just six years after Mr Hopkins founded Gemini Accident Repair Centres in Perth, and remarkably follows a similar deal in the UK 10 years ago.

He migrated to Perth after selling the UK repair business for £4.5 million ($11 million) in 2005 and has repeated the successful formula in the Australian market.

Mr Hopkins will become a major shareholder and director of Melbourne-based AMA Group, and plans to focus on expanding the merged business.

“AMA calls it a takeover but I prefer to call it a merger,” Mr Hopkins told Business News.

Since start-up in 2009, Gemini has grown to have 41 panel repair centres and one mechanical repair centre across Australia and New Zealand, with annual turnover of $150 million.

“We got to a stage where we needed to do an IPO or bring in private equity, and that was the path we were going down,” Mr Hopkins said.

The merger came about after Mr Hopkins was approached by AMA Group executive chairman Ray Malone.

“Ray has the listed vehicle but doesn’t have the national footprint or the consolidation expertise,” Mr Hopkins said.

“Gemini will take control of management of the AMA business.

“We will do a proper roll-up.”

The merged business will have 70 repair centres and annual revenue of $250 million, with plans for continued expansion.

Mr Hopkins said he was already working on about 10 greenfields locations and saw plenty of scope for further acquisitions.

AMA’s acquisition of Gemini will comprise cash and scrip payments over 3.5 years, with the full $100 million to be paid only if the business hits earnings targets.

There will be an up-front cash payment of $35 million, less Gemini’s working capital of between $7 million and $8 million.

AMA will issue two tranches of shares, with $35 million of shares entitled to dividends during a 3.5-year escrow period and a further $15 million of B-class shares not attracting dividends during the escrow period.

A final cash payment of up to $15 million will be made at the end of the escrow period.

If the full $100 million is paid, the deal represents an EBITDA multiple of 7.5 times.

Mr Malone told a conference call the price would be closer to five times earnings after accounting for expected synergies in the combined business.

He noted that Gemini had spent over $50 million building the business.

This included acquiring Platinum Collision Repair Centre, which had three sites in Perth, and Car Craft, which had two sites.

Mr Malone said the combined AMA-Gemini group would hold only 5-10 per cent of the national body repair market, which indicated the scope for further consolidation.

The proceeds from the acquisition will be shared by Mr Hopkins and his twin brother, Tim.

They opened the first Gemini body shop in the UK in 1990, at the age of 21.

The UK business was sold in 2005 and since then Mr Hopkins has built Gemini in Australia while his brother has rebuilt Gemini mark-2 in the UK.

They also jointly own property company Gemini Property Group, which owns Aqua Resort and Swings & Roundabouts winery in the Western Australia’s South West.

Mr Hopkins said when he started Gemini in Perth, the Australian industry was about 10 years behind the rest of the world.

“Now we’re in front of the rest of the world,” he said.

Mr Hopkins said he employed systems, processes and robotic technology to make the business more efficient.

“It’s all about cycle times,” he said.

The industry used to take 10 days or more to turn around each job, but that had been brought down to about three days.

STANDING BY BUSINESS. TRUSTED BY BUSINESS.

Subscription Options