Australian private auto retailers ripe for takeover from listed players - Jefferies

Peter Warren Automotive Holdings

06/08/2021 01:09

** Jefferies sees the Australian auto retail and auto parts
sector ready for mergers and acquisitions by listed players like
Eagers Automotive  APE.AX  and Peter Warren Automotive Holdings
 PWR.AX 
    ** Downward trend in new vehicles demand, worsened by the
pandemic, coupled with a crunch in supply from original
equipment manufacturers (OEM) owing to chip shortages, is
setting the stage for consolidation in the automotive retail
space
    ** Brokerage sees significant value being created through
the merger of one or more of privately held businesses, such as
Autopact and Patterson Chaney, with either APE or PWR
    ** "Given the value creation opportunity that APE has proven
through time, believe M&A is more likely than not in the near to
medium term" - Jefferies
    ** After an upbeat 1H21 for new vehicle sales, Jefferies
expects OEM supply into Australia to begin to improve early in
CY22 as the semiconductor industry rushes in to fill the dearth
of chips
    ** Brokerage adds that the value of the private businesses
in the sector would be higher if merged with one of the major
listed groups

 (Reporting by Sameer Manekar in Bengaluru)
 ((Sameer.Manekar@thomsonreuters.com;))