The Australian-listed marketplace company paid $A1.17 billion for the outstanding 51 per cent of Virginia-based Trader Interactive with the deal expected to be completed by the third quarter of 2022.

It bought the initial 49 per cent in May 2021 for $A804 million, making the total investment price $A1.976 billion.

Carsales’ statement to the Australian Securities Exchange (ASX) said the acquisition values Trader Interactive (on a 100 per cent enterprise value basis) at $A2.749 billion “representing a Q4FY22 EV/adjusted EBITDA acquisition multiple of 21.3 times.”

Trader Interactive, which has worked with Carsales since the investment started in May 2021, covers marketplace services that are similar to those of its Australian acquirer, including private listings, brand advertising, dealer services and data insights.   

Although it does not have car classifieds, it is involved in listings of commercial trucks and motorcycles, heavy equipment, personal watercraft, snow mobiles, ATVs and light aircraft.

In May last year, GoAutoNews Premium said that after spending $US624 million ($A804m) to buy about half of Trader Interactive, it “has all the hallmarks of a trojan horse to launch the Aussie auto website’s expertise into the world’s second-biggest car market.”

At the time, Carsales’ managing director and CEO Cameron McIntyre said the 49 per cent acquisition was “an important milestone” in his company’s expansion and would “support long-term growth”.

“This acquisition is expected to accelerate our international growth strategy by providing us with exposure to a significant market in the US across attractive non-automotive verticals,” he said in a statement to GoAutoNews Premium.

This week, Mr McIntyre acknowledged Trader Interactive’s “growth potential” and said the acquisition was “a natural evolution of our (Carsales) international growth strategy into large, attractive markets.”

“We have demonstrated an excellent track record of delivering strong shareholder value by diversifying in international markets. Moving to 100 per cent ownership will enable shareholders to capture the significant upside potential in that business.”

Carsales owns international car classified businesses in South Korea (Encar), Brazil (Webmotors), Mexico (Soloautos), Chile (Chileautos) and Argentina (Demotores).

He said that the deal would bring attractive financial returns to shareholders with “low double-digit EPS accretion in year one.”

In its ASX statement, Carsales said the US non-automotive market was 16 times that of the similar market in Australia “with significant opportunity for further product and technology adoption and monetisation.”

“Under 100 per cent ownership, Carsales will focus on executing its long-term product and technology strategy for the Trader Interactive business, with a significant upside expected to come from new product deployment and technology innovation.”

Carsales will raise its debt facility to $A1.4 billion from $A900 million to replace a $A562 million debt facility at Trader Interactive.

It will fund the acquisition by raising $A1.207 billion through a fully underwritten one-for-4.16 pro-rata non-renounceable entitlement offer.

The offer will be conducted at $A17.75 per new share, with the new shares ranking equally with existing fully-paid shares and eligible to participate in any final dividend.

By Neil Dowling