AUSTRALIA’S biggest motorcycle dealership operator, the publicly listed Motorcycle Holdings Ltd, will spend up to $60 million to buy a major importer and distributor of motorcycle and accessories.

The deal to buy Mojo Group – comprising Mojo Motorcycles and Mojo Electric Vehicles – gives Motorcycle Holdings a substantial footprint in importing and distributing motorcycles, ATVs and scooters, including electric models.

Mojo, which has a dealer network of about 150 outlets in Australia and New Zealand, is also one of the biggest genuine spare parts and accessories businesses in the region.

It operates from a head office in Altona North, Victoria with a 5000 square metre distribution centre and has a 2000 square metre facility in Yatala, Queensland to give it a total warehouse capacity of 2500 vehicles.

Motorcycle Holdings managing director and founder David Ahmet said the purchase made strategic sense for his company.

“We believe the acquisition of Mojo Group 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 a statement to the Australian Securities Exchange (ASX).

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

Motorcycle Holdings is to buy Mojo Group from companies owned by Michael Poynton and Joshua Carter for up to $60 million. It comprises 11.539 million Motorcycle Holdings shares in escrow for two years; $20 million in cash; plus a deferred consideration for up to $10 million.

Mr Poynton and Mr Carter “will take up senior executive positions” with Motorcycle Holdings and Mr Poynton will join the board, the company said in its ASX notice.

Motorcycle Holdings will fund the purchase by an increase in its debt facility.

The company said the price of buying Mojo Group represents an earnings multiple of 4.1 times Mojo’s FY22 net profit before tax. The transaction is expected to be 18 per cent earnings-per-share accretive before costs, based on financial accounts.

Motorcycle Holdings will seek shareholder approval for the issue of consideration shares and obtain key contract and third-party consents.

Motorcycle Holdings was started in 1989 and now operates from 41 retail locations in NSW, Queensland, Victoria and the ACT.

Its core businesses are the ownership and operation of motorcycle dealerships and retail accessories outlets for the sale of new and used motorcycles, motorcycle service and repair, accessories and parts, finance, insurance and mechanical protection plans.

It also owns and operates a motorcycle repair business which performs smash repair work for insurers.

In October 2017 it bought Cassons Pty Ltd and now also operates a motorcycle accessories wholesaling business.

By Neil Dowling