Pacific Equity Partners may wind up as the buyer for Quadrant Private Equity’s business MotorOne, but that’s only if the pair could agree on a price.
PEP has plenty on the go in what is clear evidence it is cashed up and ready to spend, but the latest situation with MotorOne has striking resemblances to one that played out last year when the Sydney-based private equity firm weighed a deal to buy cinema chain Hoyts.
As the last group standing, PEP was understood to have put in an offer of about $700m when the vendor was understood to want about $1bn.
It would likely take the business off Quadrant’s hands if it could pick it up cheaply.
MotorOne has been up for sale through Macquarie Capital and Miles Advisory with an asking price understood to be around $1bn.
The understanding is that while trade groups took a look, they passed on the opportunity.
DataRoom understands that MotorOne’s annual earnings before interest, tax, depreciation and amortisation are about $75m.
It generates income from three main business units: crash repairs, three-to-five-year subscriptions for minor repairs such as dents, and car-care services for added extras on cars for dealerships.
MotorOne describes itself as a leading business-to-business distributor of aftermarket products and services to Australian dealerships. It is in a strong position in Australia after growing market share and expanding into new channels.
Quadrant bought MotorOne from private equity firm Navis Capital for $300m in 2016 when it was known as WorldMark, and key members of management retained equity in the business.
Bapcor and Archer Capital were both underbidders at the time, but most see Bapcor, which Bain Capital bid for this year, as no longer in a position to compete, following profit downgrades. Another possibility could be Super Retail Group could show interest, although it is seen as an unlikely suitor.
Sydney-based private equity owner Quadrant moved to sell MotorOne in 2020 through Miles, which originally sold the business to Quadrant.
Quadrant was believed to be seeking a price of at least $600m when MotorOne was generating about $40m of annual EBITDA.
PEP showed interest the last time it was for sale, although earlier on in the auction, it was not part of the latest conversations.
The pitch in the past concerned MotorOne’s distribution network, with high barriers to entry, consistent earnings and defensive nature in a growing sector.
According to IBISWorld, the number of motor vehicles is forecast to grow steadily, in line with population growth, and higher disposable incomes will contribute to greater consumer demand for motor vehicle parts.
Other businesses PEP is looking to buy are Waste Services Group, Aveo and Opal.
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