Eagers set to spend on more dealerships after $62m McMillan Shakespeare exit

McMillan Shakespeare is one of Australia’s leading providers of salary packaging and novated leasing services and industry experts in fleet and asset management. Picture: iStock

Eagers Automotive could be positioning itself to buy more dealerships after selling the 5.7 per cent stake in the $1.1bn McMillan Shakespeare it bought two years ago.

The company lodged a substantial shareholder notice on Wednesday confirming the sell down on Tuesday night in the fleet leasing and salary packaging business.

Shares on Tuesday closed at $17.54, and the sale of the 3976,229 shares saw Eagers pocket about $61.6m after buying in on June 15 2023.

At that time in 2023, its shares were trading at about $17.50 and it was thought to have bought in to strengthen collaboration with McMillan Shakespeare that was benefitting on the fringe benefit tax exemptions for the purchase of electric vehicles.

The ASX notice suggests it sold shares this week at about $15.50 each, a discount of about 11.6 per cent.

McMillan Shakespeare is one of Australia’s leading providers of salary packaging and novated leasing services and industry experts in fleet and asset management.

Sydney Roosters chair and car dealership tycoon Nick Politis is a 28 per cent shareholder of Eagers.

It is understood that an institutional investor purchased the holding.

Some market sources say that Eagers has made about a 15 per cent return on its investment, factoring in dividends, including the payment of a special divided.

There’s now questions in the market as to whether Eagers instead targets rival Fleet Partners for an investment with the funds reaped, with the business being cheaper and the potential to gain a vehicle distribution agreement.

However, most think a more likely scenario is that it has better uses for the money elsewhere, such as for acquistions overseas, with some chatter it may be keen to secure Toyota dealerships in Canada.

Shares in Eagers are up close to 50 per cent this year with the group heavily exposed to the benefits of falling interest rates through its customers, its own corporate debt and financing arrangements for floor stock.