Gold Coast’s AMA Group agrees to buy Capital SMART and ACM Parts from Suncorp for $440m

A Gold Coast listed company has agreed to spend $440 million on a breathtaking acquisition from a major insurance group.

Bundall-based AMA Group has expanded its smash repair network. Photo: iStock

BUNDALL based ASX-listed automotive group AMA has agreed to buy two key businesses from Suncorp Group.

In an announcement to the ASX this morning, Suncorp said it had reached an unconditional agreement to sell its Capital S.M.A.R.T Group vehicle repairs network to AMA for $420 million.

It said it had also agreed to sell AMA its ACM Parts business for $20 million cash.

Suncorp will retain a 10 per cent stake in Capital S.M.A.R.T, as well as a subsidiary board seat, and expects to make net profit of $275-295 million through the sale, which it hopes will be finalised by the end of the month.

The S.M.A.R.T business has a network of 50 outlets in Australia and New Zealand and repaired about 179,000 vehicles last financial year.

AMA and Suncorp have agreed to a 15-year strategic partnership, with two five-year options by Suncorp, with Capital S.M.A.R.T, so ensure Suncorp’s capacity to process motor vehicle claims is maintained.

In its own announcement to the market, AMA said analysts expected the deal would bring double-digit gains to its earnings-per-share ratio and that it expected it could carve out $17 million in costs from the Capital S.M.A.R.T business.

AMA said it would fund the purchase with new debt and a $216 million equity raising exercise, which would result in the issuing of about 188 million new shares at an offer price of $1.15 per share.

AMA Group entered a trading halt yesterday, ahead of the announcement, and had been trading at $1.215.

Suncorp CEO Steve Johnston. Photo Mark Cranitch.

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Suncorp Group CEO Steve Johnston said the transaction was in the best interests of customers, shareholders and the business.

“The increasing complexity of repairs is driving significant change in the smash repair and parts procurement industry, and the divestment means Suncorp can focus on its core Insurance and Banking operations,” he said.

“Importantly, the agreement maintains Suncorp’s competitive advantage and we look forward to working closely with AMA as an ongoing partner.”

AMA, an automotive after-care group which has 120 panel shops, as well as accessories and other after-care businesses in its portfolio, relocated from Brisbane to Bundall earlier this year.

It reported a 43.7 per cent profit increase after an acquisition spree last financial year when it spent $37.5 million acquiring 21 existing businesses and launched four new ones — all supported by contracts with vehicle insurers.

Suncorp said its customers would continue to have access to market leading repairs, under the 15-year partnership with AMA.

Bundall-based AMA Group has expanded its smash repair network. Photo: iStock

AMA CEO Andrew Hopkins said the group looked forward to combining Capital S.M.A.R.T’s capabilities in low to medium severity panel repairs with AMA’s platform across the smash repair market.

“The acquisition further strengthens our longstanding close relationship with Suncorp who, in addition to committing to a long-term service agreement with Capital S.M.A.R.T, are joining us as a partner in the business,” he said.

Under the sale of Suncorp’s other business, ACM Parts, ACM will continue to provide genuine alternative parts to the repair market including Suncorp’s repairer network.