Motorcycle Holdings shares surge after inking Mojo Group deal

The two motorbike enthusiasts behind Mojo Group have sold their business for $60m to Australia’s largest motorcycle dealer.

Motorcycle Holdings (MTO) shares have soared after announcing it will acquire one of country’s biggest importers and wholesalers of motorcycles, genuine spare parts and accessories.

Shares in MTO, Australia’s largest motorcycle dealer, rallied 15.3 per cent, or 33c, to $2.49 after it told the market it will acquire all shares in the Mojo Group’s two companies – Mojo Motorcycles and Mojo Electric Vehicles – for $60m.

MTO managing director and founder Brisbane-based David Ahmet said the acquisition made strategic sense.

“We believe it will present significant growth opportunities by introducing the importation and distribution of motorcycles, ATVs, and scooters (including electric models) into our existing product offering, increasing our warehouse capacity and expanding our distribution network” he said.

“In addition, MTO continues to explore other motorcycle franchise acquisition opportunities to increase its market share and geographic coverage in Australia.”

David Ahmet, managing director Motorcycle Holdings, in list Brisbane showroom.

Mojo Group is owned by co-founders Michael Poynton and Joshua Carter and headquartered in Altona North in Victoria in a purpose-built 5000sq m distribution centre.

The company also has a 2000sq m facility in Yatala in Queensland to increase total warehousing capacity to 2500 vehicles. It operates in Australia and New Zealand with a 150-strong dealer network.

In 2021-22 Mojo Group recorded turnover of $124.2m and net profit before tax of $14.5m.

As part of the MTO deal Mr Poynton and Mr Carter will emerge as 16 per cent shareholders of the company, receiving about 50 per cent of the sale consideration as shares, escrowed for two years. They will take up senior executive positions in MTO and Mr Poynton will also become a director.

The acquisition will be made up of 11.539 million MTO shares plus $20m in cash and a deferred consideration of up to $10m. The acquisition price represents an earnings multiple of 4.1 times Mojo Group’s 2021-22 net profit before tax and on a proforma 2021-22 consolidated basis the transaction is expected to be 18 per cent of earnings per share accretive before synergies, integration costs and PPA related amortisation.

David Ahmet, managing director Motorcycle Holdings.

In MTO’s 2021-22 results delivered in August the company said it delivered a resilient performance in challenging market.

It reported a 7 per cent increase in motorcycle units sold to 24,413, a 7 per cent rise in revenue to $462.6m, however net profit after tax and JobKeeper fell by 18 per cent to $23.1m.

MTO has forecast that the Mojo acquisition will increase revenue by more than 27 per cent to about $580m and net profit after tax will rise by 41 per cent to $46m on a proforma consolidated basis.

In August Mr Ahmet said the strength of MTO’s geographic scale and diversity enabled them to capitalise on market demand and mitigate the impacts of localised Covid-19 government lockdowns and flooding in NSW and Queensland.

“Strong demand for new and used motorcycles continued throughout the period, driven by favourable economic conditions and changes in consumer behaviour because of the pandemic,” he said.

“Our national pre-owned motorcycle strategy has also continued to deliver profit growth.

“The company’s performance also highlighted the benefits of our growth strategy with the finalisation of the acquisition of Forbes and Davies in New Zealand and Wide Bay Motorcycles in early 2022.”