Connexion Mobility to Spend A$5 Million on Hallam Road Automotive Acquisition

Strategic Acquisition to Diversify and Strengthen Earnings

Connexion Mobility Ltd (ASX:CXZ) has struck a deal to acquire Hallam Road Automotive (HRA), a Melbourne-based independent automotive service and repair centre, for approximately A$5.0 million. The transaction includes an upfront cash payment of about A$4.0 million and a performance-based earn-out of around A$1.0 million payable over the next 12 months. This acquisition is poised to immediately boost Connexion’s earnings per share (EPS) by an estimated 25-35%, a significant lift given the company’s recent EPS base of 0.30 US cents.

The deal is designed not only to grow Connexion’s earnings but also to diversify and stabilise them. Connexion has long been exposed to operational foreign exchange risk, particularly from AUD/USD fluctuations. The acquisition of Hallam Road Automotive, which generates AUD-denominated earnings, is expected to materially reduce this currency sensitivity. Connexion highlighted that a rise in the AUD/USD exchange rate from 70c to 80c could otherwise have trimmed its net profit before tax by approximately US$0.7 million. This move aligns with the company’s broader strategy to strengthen the sustainability of its earnings and reduce volatility.

Hallam Road Automotive’s Market Position and Operational Strength

Hallam Road Automotive is a well-established player in Melbourne’s South-East, with a 22-year history and a reputation for technical excellence and reliable customer service. Its nine-bay facility supports both high-volume servicing and complex repairs, catering to a balanced client base split roughly 60/40 between commercial fleets and retail customers. The business benefits from strong supplier relationships, including national distributors and the Capricorn co-operative, enabling competitive parts sourcing.

HRA’s operational success hinges on skilled labour management and efficient workshop workflows. The company employs a team of eleven, focusing on retaining talent and providing consistent work, which is crucial in an industry facing a nationwide shortage of qualified technicians. This operational model mirrors Connexion’s own investee, Covertrue, which similarly aims to professionalise and corporatise service delivery in the automotive sector. Connexion’s recent stake in Covertrue has been part of its strategy to expand its footprint in automotive services beyond software solutions, as detailed in its Covertrue stake expansion earlier this year.

Funding and Integration Plans

The acquisition will be funded through Connexion’s existing cash reserves supplemented by a new A$2.5 million amortising debt facility from National Australia Bank. This approach leaves Connexion with substantial liquidity post-transaction to support further growth or M&A activities. The company’s strong balance sheet, with net cash and investments of US$5.6 million as of March 2026, underpins this financial flexibility.

Post-acquisition, Hallam Road Automotive’s founder, Elie Chakkour, will remain involved for 12 months in a consultancy role to ensure a smooth handover and continuity of key commercial relationships. This continuity is critical given HRA’s reliance on skilled management and operational expertise. Connexion also sees potential to leverage HRA as a local test-bed for its software products and to enhance HRA’s digital presence, supported by Connexion’s technology resources.

The acquisition comes at a time when Connexion is actively pursuing M&A opportunities to build scale and diversify earnings within the automotive and fleet management intersection. This deal complements recent developments such as Connexion’s record revenue growth with GM Canada and ongoing expansion in software and service offerings.

Industry Dynamics and Future Opportunities

The Australian automotive service and repair sector is resilient, driven by an aging vehicle fleet (average age ~11.6 years) and increasing vehicle complexity requiring advanced diagnostics and skilled labour. Independent workshops like HRA benefit from regulatory changes such as the Motor Vehicle Information Scheme, which enforces fair access to repair data and protects consumers’ rights to choose independent service providers without voiding warranties.

With many smaller local competitors facing succession challenges or lacking investment in technology, Connexion sees an opportunity to consolidate and professionalise the fragmented market. The acquisition of HRA provides a platform for selective bolt-on acquisitions and deeper engagement with automotive software partners, potentially accelerating Connexion’s strategic growth trajectory.