Carsales buys stake in Stratton Finance
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Carsales has announced the purchase of 50.1% of Stratton Finance, 'one of the highest traffic generating vehicle finance websites in Australia with over a million visits per year'.
Stratton was founded in 1998 by Rob Chaloner who remains as managing director and who is – we presume – selling at least some of the shares into the deal and retaining some of the other 49.9%, but the announcement doesn't provide specifics.
Earnings before interest, tax, depreciation and amortisation (EBITDA) has grown by 50% a year over the past three years, although its actual level is not disclosed. Carsales will pay $60m for the stake – using cash and debt – and the purchase is expected to increase earnings per share immediately.
The purchase is a slight departure for Carsales, but makes good sense, as Carsales should be able to increase Statton's exposure across its various websites. The two companies are already well acquainted, however, with Stratton having been an advertiser with Carsales 'for almost as long as Carsales has had advertisers'. Apparently the companies also have 'very similar DNA and operating styles'.
The stock is down slightly since Carsales buys in South Korea (Hold – $11.23). HOLD.
Note: Our model Growth and Income portfolios own shares in Carsales.
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