AHG to raise $83m for acquisitions

Automotive Holdings Group is continuing on a path of expansion after it agreed to acquire Coventry Group's WA automotive parts distribution business and Adelaide-based freight business, Harris Refrigerated Transport.

The Coventry acquisition will cost AHG $29 million plus $8 million in additional working capital, and the purchase of Harris Refrigerated Transport was agreed to at $32 million.

Perth-based Coventry Group previously sold its South Australian automotive parts distribution business to east coast company Burson Automotive Pty Ltd.

Coventry Group said that the cash generated from the sale of the WA and SA automotive parts distribution businesses will enable it to pursue a range of capital management and growth initiatives, building on its remaining industrial products and gasket manufacturng divisions.

Revenue from the auto parts division totaled in excess of $167 million last financial year, with the company witnessing increased sales into the mining sector in Western Australia.

AHG said that it would raise the funds for the acquisitions through an equity placement seeking $82.9 million at $2.44 per share, a 7.1 per cent discount to its volume weighted average price from yesterday.

AHG's Managing Director, Bronte Howson, said the Coventry's deal was "a strategic acquisition of a highly complementary business to AHG's leading automotive parts and accessories distribution business, AMCAP."

Harris Refrigerated Transport is a national refrigerated freight service, employing 290 people across six locations with sales revenue of around $80 million.

The $32 million purchase price comprises a cash payment of $17.4 million and an assumption of certain hire purchase and chattel mortgage facilities of $14.6 million.

Mr Howson said that both of the acquisitions were an outstanding opportunity for AHG to acquire businesses with operations that would integrate quickly and provide material synergy benefits.