carsales.com announced that it has agreed to acquire a 49.0% interest in Trader Interactive, a leading platform of branded marketplaces in the United States, providing digital marketing solutions and services across the commercial truck, recreational vehicle, power sports and equipment industries, for US$624m.
Founded in 2010 in Norfolk, Virginia, Trader Interactive generated revenue of US$123m and EBITDA of US$61m in CY20. The business has a strong track record of delivering earnings growth with EBITDA CAGR of 13% over the last five years.
The company offers marketplace services across listings subscriptions, private party listings, brand advertising, listing enhancements, as well as offering software, dealer services and data insights to provide dealer and industry intelligence for customers. It has a diversified customer base of 8,500 dealers and 49 original equipment manufacturers. Its website has approximately 1 million online listings and an average of over 13 million monthly unique visitors in 2020. It currently has over 380 employees.
The acquisition values Trader Interactive on a 100% Enterprise Value basis at US$1,625m, representing a CY20 EV / EBITDA acquisition multiple of 26.5x. It is also expected to be Earnings per Share positive from completion, with mid-single-digit EPS accretion from year one which is expected to grow thereafter.
The acquisition will be funded by a combination of debt and equity. carsales announced the launch of approximately $600m fully underwritten pro-rata accelerated renounceable entitlement offer to fund the acquisition. The remaining $222m will be funded via an extension of existing debt facilities from existing lenders.
Completion is subject to customary closing conditions, including carsales obtaining the necessary regulatory approvals, which are expected to be satisfied by early H1 FY22.
carsales Managing Director and CEO Cameron McIntyre says, “We have demonstrated an ability to build valuable international partnerships over many years in our automotive business and see this acquisition as an important milestone in carsales’ international and vertical marketplace expansion. It also represents a significant investment to support our long-term growth. This acquisition is expected to accelerate our international growth strategy by providing us with exposure to a significant market in the United States across attractive non-automotive verticals.”