Bapcor buyout talk has ex-CEO Darryl Abotomey back at wheel

Outgoing Bapcor chief executive Darryl Abotomey.

With the swift exit of Darryl Abotomey from Bapcor, the point of discussion in the market has turned to the possibility of a buyout proposal looming for the automotive aftermarket parts provider with his involvement.

No one knows the company as well as the group’s long-time, outgoing chief executive who has been in the top job for a decade.

He was at the helm when it transitioned from Quadrant Private Equity’s ownership on to the listed market in 2014, when it was Burson Auto Parts. Given their relationship, one possibility is that they pair up again to take the company private.

After earlier telling the market that Mr Abotomey would retire on February 28, on Monday Bapcor issued a statement saying his departure would now be imminent due to “a marked deterioration in the relationship between the board and the CEO” making his position untenable.

Bapcor signalled on Monday that unrest had been brewing for a while, saying a search for a new chief executive to install a more “contemporary leadership and management approach to drive the company’s growth” had been under way for some time.

Bapcor’s shares crashed about 18 per cent in the days after the company’s announcement on November 23 of Mr Abotomey’s departure. DataRoom reported on Monday that the seasoned automotive aftermarket parts chief executive is held in high regard by several investors who may be about to start lobbying the board for him to remain at the helm.

AustralianSuper, Aware Super and Paradice Investment Management own 8.2 per cent, 5.2 per cent and 4.95 per cent in Bapcor respectively and some have pointed to those funds as the ones that may have taken exception to Mr Abotomey’s exit.

Some market analysts have described Bapcor as an expensive stock. But the recent plunge in its share price may prompt buyout funds to look twice at the business as the return of cars to the road following pandemic-related lockdowns points to higher earnings in the months ahead.

Another view is that a bid would be seen as opportunistic and would not gain approval.

Private equity firms have funds bursting at the seams with cash they need to spend while interest rates are low and mergers and acquisitions activity is clearly taking place in the sector.

Only last week, Quadrant’s rival Pacific Equity Partners sold its towing solutions provider AutoPacific Group for $745m to the listed automotive parts provider GUD Holdings – a price said to be double what it paid for the business in 2019.