Bapcor Shares Gain Over 14% on Bain’s $1.21B Takeover Offer

Australian automotive parts retailer Bapcor Ltd. received an unexpected acquisition bid on Tuesday from US private equity giant Bain Capital LP, which would see the troubled firm’s value at A$1.83 billion ($1.21 billion).

Under the terms of the proposed non-binding, conditional deal, Boston, Massachusetts-based Bain is offering shareholders of the Autobarn parent A$5.40 in cash per share, a 23.9% premium to the company’s closing price of A$4.36 on Friday.

The vehicle parts store operator said its board will evaluate the proposal, although it warned that it is not currently certain whether the indicative proposal would lead to an agreement.

The news sent Bapcor’s stock rising 14.9% to A$5.01 in morning trade on Tuesday, its highest since March 2020, before easing to trade 12.7% higher at A$4.92. It was the best performer on the S&P/ASX 200 index, which declined by 1.3%.

Shares in the Australia-based firm fell to more than a four-year low in May, posting a 35% drop after it estimated a full-year profit loss of A$32 million loss on the year prior.

The stock had difficulty rebounding in the last four weeks, but Bain’s potential takeover has provided support.

Bain Comes In Amid Bapcor’s Performance Struggles

Bain’s buyout offer came as the Australian car parts shop lost momentum due to tough trading conditions weighing on its retail performance and several departures across its senior management team.

Last month, Bapcor warned of a challenging trading environment curbing its retail performance as consumers trimmed spending, combined with increased costs and its wholesale business facing intense competition from local rivals such as Supercheap Auto owner Super Retail Group Ltd.

The firm also said concerns over competitive pricing might pressure volume and margin amid higher interest costs.

Additionally, the company stated in May that its second-half net profit may end lower than the first-half’s A$54.2 million, expecting the financial result for this year to be between A$93 million and $97 million. The Autobarn owner reported a net profit of A$125.3 million for the financial year 2023.

The last-minute decision of then-elected chief executive Paul Dumbrell not to join the automotive parts retailer in April also added to the firm’s challenges.

Analysts saw Bapcor as a valuable business operating in an advantageous industry.

They believed Bain put forward its bid at an opportunistic time when the company’s leadership and operations were in turmoil, considering it has yet to assign a permanent chief executive and new chair following Margie Haseltine’s decision in February not to run for reelection this year.

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