AUSTRALIA’S biggest motorcycle wholesale and retail company has acquired a major rival firm and announced it would raise $67 million through a share subscription to existing shareholders.

The 29-year-old Motorcycle Holdings Ltd, which recently posted a net profit of $9.3 million on the back of $235.3 million in revenue for the 2017 financial year, said the purchase of motorcycle parts and accessories business Cassons would increase annual revenues by 30 per cent to about $310 million.

Cassons has agreed to the acquisition for a total of $123.2 million, for $98.7 million in cash and the remainder in Motorcycle Holdings shares.

The owners of Cassons, brothers Rob and John Casson, will take up senior positions in Motorcycle Holdings. Their business had revenue of $76.5 million in the 2017 financial year.

Cassons has wholesale and retail divisions, involved in importing and distributing motorcycle parts and accessories and selling product through its eight stores in NSW and Victoria and online under the name Motorcycle Accessories Supermarket.

It stocks brands including AGV, Arai, Renthal, Metzler, Scala Rider, Momo Design, Leatt, Belray, Dainese and O’Neal. Many are on an exclusive basis.

Motorcycle Holdings, which became a publicly listed company in April 2016, has 34 franchises at 24 locations in NSW, Queensland and the ACT and sells eight of the top 10 motorcycle brands that represent about 85 per cent of national sales. The stores are mainly branded TeamMoto.

In addition to retailing new and used motorcycles, it sells accessories and parts, finance, insurance, warranty and service and repair.

Motorcycle Holdings also owns and operates a rider training school and a smash repair business that works with insurance companies.

The capital raising by Motorcycle Holdings aims for $67 million through a renounceable entitlement offer at $3.85 a share. The raised funds, together with $35 million of debt, will pay for the cash component of the Cassons purchase.

Motorcycle Holdings founder and managing director, David Ahmet, said the acquisition would increase the scale of its existing retail accessory business, expand its distribution network and improve the product margins by retailing Casson goods through its own dealer network.

“We believe that the combination of the two businesses will also present significant growth opportunities by introducing used motorcycles and other services into the growing Cassons retail network,” he said.

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

In its 2017 financial report, Motorcycle Holdings said new motorcycle sales were up by 1551 units to 9089 bikes in the year – a rise of 17 per cent on the previous year.

By comparison, the Australian new-bike market sold 112,587 units in the 2017 financial year, a rise of 1.6 per cent.

Honda led the market in the first nine months of this calendar year with 16,646 sales for a market share of 22.8 per cent. Yamaha was second (14,546 units and 19.9 per cent share); then Kawasaki (6936 sales for a share of 9.5 per cent); and Harley-Davidson (6526 sales for a share of 8.9 per cent).

Motorcycle Holdings has the franchises for these top-four selling brands.

The company also reported another rise in used motorcycle sales, with 7221 for the year, a rise of almost 12 per cent. It was the fifth consecutive year of sales improvements.

By Neil Dowling