QUEENSLAND company Super Cheap Auto has agreed to pay $25.3 million for Perth-based auto parts group Marlows. The price of the acquisition was revealed for the first time in a notice of meeting sent recently to Marlows’ shareholders.
QUEENSLAND company Super Cheap Auto has agreed to pay $25.3 million for Perth-based auto parts group Marlows.
The price of the acquisition was revealed for the first time in a notice of meeting sent recently to Marlows’ shareholders.
Super Cheap has also revealed plans to open at least 10 new stores in Western Australia, in addition to the 12 Marlows stores it is purchasing.
Up to six of the new stores are scheduled to be open by December, according to managing director Bob Thorn.
“We will be in the mid-20s in 18 months,” Mr Thorn said.
The expansion in WA is part of Super Cheap’s aggressive national growth strategy.
The group currently has 123 stores across Australia. With the addition of Marlows’ 21 stores in WA, SA and Victoria, plus new openings, it expects to have 180 stores by the end of the year.
The Marlows acquisition will make a sizeable contribution to growth in Super Cheap’s turnover.
Marlows’ annual turnover is about $80 million, while Super Cheap’s turnover last year was $270 million. Its target for 2005 is $500 million.
Mr Rowe said Super Cheap would not employ Marlows’ senior management, including chairman Ray Della-Polina or managing director Paul Wagner.
However he expected other staff would be retained.
Super Cheap is planning to introduce a wider product range to the WA stores, after it completes the takeover and rebrands the Marlows stores.
The stores will have a wider range of auto accessories, tools and handyman equipment, in contrast to Marlows traditional focus on auto parts.
It plans to retain the auto servicing business at existing Marlows outlets, but will not offer this service at new sites.
Marlows’ latest accounts reveal the group’s earnings have been adversely affected by losses in Victoria, where it has five stores, and on its Internet sites.
Its net profit after tax for the half-year to December 2002 was $820,000, up from $690,000 previously.
“Unfortunately the outstanding results being achieved in Western Australia and to a lesser extent South Australia are impacted by significant losses in Victoria,” chairman Ray Della-Polina said in a report to shareholders.
The notice of meeting sent to Marlows shareholders states that the net return from the sale of the business will be $18.7 million, after adjusting for the sale of residual assets, repayment of liabilities, and $1.1 million of sale and winding up costs.
The main shareholders include publicly listed companies Chieftan Securities, which has a 31 per cent stake, and Alesco Corporation, with 25 per cent.
At the meeting on April 17 Marlows shareholders will be asked to approve the sale of the company’s business undertakings.
They will also be asked to approve a $125,000 fee to be paid to managing director Paul Wagner “in recognition of the additional time and effort” spent on the sale negotiations “and as an incentive to maximise the sale consideration”.
In addition, shareholders will be asked to approve a change in the company’s name to “ACN 009 221 970”.
Upon completion of the sale, Marlows’ intention is to proceed with a voluntary liquidation and return all funds to shareholders.
p Anatomy of a takeover: Inside Super Cheap Auto’s acquisition of Marlows. See Financial Management, page 32.
