MaxiPARTS has completed its $11.2 million purchase of Air Brake Systems, an acquisition expected to lift earnings per share by 17% before synergies. The deal adds a commercial vehicle braking business with $20 million in revenue and is forecast to contribute $5.5 million to group operating EBITDA by FY29, including synergies and underlying growth.
- $11.2 million Air Brake Systems acquisition completed
- 17% EPS accretion expected before synergies
- 75% of the purchase price paid at completion
- Air Brake Systems generated $20 million revenue and $2.8 million average pre-AASB16 operating EBITDA
- FY29 group operating EBITDA contribution forecast at $5.5 million including synergies and growth
Air Brake Systems Deal Moves From Proposal to Ownership
MaxiPARTS Limited (ASX:MXI) has completed its $11.2 million acquisition of Air Brake Systems, turning a previously announced expansion into an operating business inside the commercial vehicle parts distributor. The transaction was funded through MaxiPARTS’ existing cash and debt facilities, avoiding a new equity issue.
The purchase price represents four times Air Brake Systems’ average operating EBITDA of $2.8 million before AASB 16 adjustments, and MaxiPARTS says the deal is expected to be 17% accretive to earnings per share on a full-year basis before any synergies. The consideration is not entirely paid upfront: 75% was due at completion, while 12.5% is payable at each of one and two years after completion, subject to specific performance criteria.
Commercial Vehicle Braking Adds Technical Depth
Air Brake Systems has operated since 1991 and employs 20 people from a site in Hornsby, New South Wales, supported by remote sales and technical staff across Australia’s east coast. It generates about $20 million in revenue, with roughly 60% coming from brake kits supplied to trailer original equipment manufacturers. The balance comes from aftermarket parts, technical support and telematics.
The business is one of three authorised Wabco original equipment distributors in Australia and also distributes Raufoss, Kongsberg, Knorr-Bremse and Haldex products. Its role in the transaction was flagged in Air Brake Systems acquisition coverage, which reported the deal alongside a proposed $2.50-per-share cash offer from Ares Management Asia.
Synergies Set a Higher Earnings Target
MaxiPARTS estimates that Air Brake Systems’ underlying growth and anticipated synergies will contribute $5.5 million to group operating EBITDA in FY29. The plan includes shifting some existing MaxiPARTS supplier spending into the acquired business, expanding MaxiPARTS’ brake range and technical capability, sharing customer relationships, and using the group’s national warehousing network to improve Air Brake Systems’ stock availability and service.
That forecast also includes growth in telematics and the traditional business, as well as cost savings from scale and group support. MaxiPARTS cautions the opportunity will be partly offset by losing some Air Brake Systems sales to MaxiPARTS competitors. The next test is therefore less about closing the transaction than converting a neatly priced acquisition into the promised operational gains without allowing the additional debt and deferred consideration to dilute the earnings benefit.
Bottom Line?
The headline accretion is immediate, but the larger FY29 prize depends on integration, customer retention and delivery of the identified synergies.
Questions in the middle?
- How quickly will the forecast 17% EPS accretion appear in reported results?
- Can MaxiPARTS deliver the $5.5 million FY29 EBITDA contribution after competitor-related sales losses?
- What cash and debt profile will remain after the deferred consideration and integration costs are accounted for?