Car Group Limited · ASX:CAR
Car — carsales.com — Merger or Acquisition (May 2021)
62 slides from Car's merger presentation, May 12, 2021
Slide 1: Acquisition of Significant Stake in Trader Interactive and Equity Raising
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES For personal use only ACQUISITION OF SIGNIFICANT STAKE IN TRADER INTERACTIVE AND EQUITY RAISING 12 May 2021 1 NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES
Slide 2: Disclaimer
DISCLAIMER This disclaimer applies to this Presentation and the information contained in it. For personal use only This presentation (“Presentation”) has been prepared by, and is the sole responsibility of, carsales.com Limited ACN 074 444 018 (“carsales”) (ASX:CAR). This Presentation has been prepa
Slide 3: Disclaimer
DISCLAIMER This disclaimer applies to this Presentation and the information contained in it. For personal use only United States: This Presentation does not constitute an offer to sell, or the solicitation of an offer to buy, securities in the United States. Neither the Entitlements nor the New Shar
Slide 4: Disclaimer
DISCLAIMER This disclaimer applies to this Presentation and the information contained in it. For personal use only Rounding: Certain figures, percentages, estimates, calculations of value and fractions provided in this Presentation are subject to the effect of rounding. Accordingly, the actual calcu
Slide 5: Disclaimer
DISCLAIMER This disclaimer applies to this Presentation and the information contained in it. For personal use only Underwriting arrangements: To the maximum extent permitted by law, Morgan Stanley Australia Securities Limited (ABN 55 078 652 276) and Goldman Sachs Australia Pty Ltd (ABN 21 006 797 8
Slide 6: Contents
CONTENTS For personal use only Transaction Summary 7-10 Overview of Trader Interactive 11-14 Strategic Rationale 15-21 carsales Y21 Performance Update 22-23 Transaction Funding and Financial Impact 24-28 Equity Raising 29-31 Conclusion 32-33 Appendices 34-62 6 NOT FOR DISTRIBUTION OR RELEASE IN THE
Slide 7: Transaction Summary
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES For personal use only TRANSACTION SUMMARY 7 NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES
Slide 8: Transaction Summary
TRANSACTION SUMMARY For personal use only • carsales to acquire 49.0% interest in Trader Interactive (“Trader Interactive” or “TI”), (“Acquisition”), for US$624m1, or approximately A$797m equivalent2 (“Acquisition Price”) Transaction Details • The Acquisition Price values Trader Interactive on a 100
Slide 9: Transaction Summary (Continued)
TRANSACTION SUMMARY (CONTINUED) For personal use only • carsales will invest alongside existing owners West Street Capital Partners VII, L.P. (“Goldman Sachs PIA”), Eurazeo North America Transaction Inc. (“Eurazeo”) (together the “Sponsors”) and management and employees, who collectively own remaini
Slide 10: Investment Thesis
INVESTMENT THESIS Acquisition of Trader Interactive is aligned to our strategy and track record of growing internationally For personal use only 1 2 3 TI operates in large and TI is a high quality business Exposure to favourable structural highly attractive markets with strong growth potential trend
Slide 11: Overview of Trader Interactive
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES For personal use only OVERVIEW OF TRADER INTERACTIVE 11 NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES
Slide 12: Trader Interactive Financial Profile
TRADER INTERACTIVE FINANCIAL PROFILE Trader Interactive has a strong financial track record For personal use only Overview of Trader Interactive Adjusted Revenue and Adjusted EBITDA (US$m)4 • Leading platform of branded marketplaces, providing digital Adjusted Revenue Adjusted EBITDA CY 16-20 CAGR m
Slide 13: Trader Interactive Brands and Services
TRADER INTERACTIVE BRANDS AND SERVICES Founded in Norfolk, Virginia, with c.380 employees TI operates across four key segments in the US, with a focus on RV, For personal use only motorcycle, truck and equipment industries. Supported by software, service and data insights capability Brand Position S
Slide 14: Trader Interactive Has an Experienced Management Team
TRADER INTERACTIVE HAS AN EXPERIENCED MANAGEMENT TEAM Trader Interactive’s management team has strong experience in non-automotive classifieds For personal use only • Appointed CEO in 2017 • Appointed CFO in 2017 • Joined TI in 1997 as a Sales Manager with • Joined TI in 2000 as VP of Finance and Au
Slide 15: Strategic Rationale
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES For personal use only STRATEGIC RATIONALE 15 NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES
Slide 16: carsales Current Non-Automotive Portfolio
STRATEGIC RATIONALE CARSALES CURRENT NON-AUTOMOTIVE PORTFOLIO carsales has built a portfolio of market-leading non-automotive marketplaces in Australia over the last 15 years For personal use only carsales current Non-Automotive Market Positions carsales’ Non-Automotive Business Commentary Bike CCS
Slide 17: Market Sizing and Digital Profile
STRATEGIC RATIONALE MARKET SIZING AND DIGITAL PROFILE US non-automotive advertising is a large, increasingly digital market For personal use only TI operates in large and highly attractive markets Dealers are increasingly focused on digital marketing channels carsales non-auto Digital Channels % of
Slide 18: Dealer Penetration Opportunity and Monetisation Opportunity
STRATEGIC RATIONALE DEALER PENETRATION OPPORTUNITY AND MONETISATION OPPORTUNITY TI is well positioned to grow dealer penetration and monetisation For personal use only There is a significant opportunity to grow TI’s dealer penetration And increase TI’s monetisation given strong ROI Subscribed Dealer
Slide 19: Value Creation Opportunities
STRATEGIC RATIONALE VALUE CREATION OPPORTUNITIES Significant opportunity to enhance growth through carsales’ experience and technology For personal use only 1 Technology platform and 2 New product deployment 3 Strategic value creation insights capability Key value • carsales has a strong track recor
Slide 20: carsales Track Record of Global Acquisitions Supporting Growth
STRATEGIC RATIONALE CARSALES TRACK RECORD OF GLOBAL ACQUISITIONS SUPPORTING GROWTH Strong track record of driving growth through international expansion For personal use only South Korea - Encar Brazil: webmotors (30% owned) Revenue (A$m)1 EBITDA (A$m)1 Revenue (A$m)1 EBITDA (A$m)1 CAGR: 21% CAGR: 2
Slide 21: Improved Revenue Diversification
STRATEGIC RATIONALE IMPROVED REVENUE DIVERSIFICATION Enhances carsales’ geographical and industry diversification For personal use only Enhances carsales’ geographical diversification Enhances carsales’ industry diversification Geographical Revenue1 Mix Industry Revenue1 Mix Australia Australia Auto
Slide 22: carsales FY21 Performance Update
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES For personal use only carsales FY21 PERFORMANCE UPDATE 22 NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES
Slide 23: carsales FY21 Performance Update
CARSALES FY21 PERFORMANCE UPDATE We provide the following estimate of the FY21 results for the carsales business excluding the Acquisition. For personal use only All numbers referenced in relation to FY21 are unaudited and will be subject to review as part of our year-end audit process. The result r
Slide 24: Transaction Funding and Financial Impact
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES For personal use only TRANSACTION FUNDING AND FINANCIAL IMPACT 24 NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES
Slide 25: Transaction Funding and Terms
TRANSACTION FUNDING AND TERMS The Acquisition will be funded by a mix of equity and debt For personal use only • Acquisition Price of US$624m1, or approximately A$797m equivalent2 for 49% of the Acquisition Price interest in Trader Interactive Sources • The Acquisition Price, plus transaction costs,
Slide 26: carsales Pro Forma Historical Profit and Loss – LTM to December 2020
CARSALES PRO FORMA HISTORICAL PROFIT AND LOSS – LTM TO 31 DECEMBER 2020 LTM1 Ended 31 December Trader Basis of preparation 2 2020, $A Millions carsales Interactive3 Adjustments Pro Forma For personal use only • The pro forma information is presented to show the impact of the Acquisition had it been
Slide 27: Pro Forma Look-Through P&L Analysis
PRO FORMA “LOOK-THROUGH” P&L ANALYSIS LTM1 Ended 31 December Trader Basis of preparation For personal use only 2 2020, $A Millions carsales Interactive3 Pro Forma • The adjacent pro forma financials have been prepared Domestic Revenue 324.3 - 324.3 using carsales’ look-though methodology as follows:
Slide 28: Pro Forma Balance Sheet Based on December 2020
PRO FORMA BALANCE SHEET BASED ON 31 DECEMBER 2020 31-Dec-20 Impact of Basis of preparation For personal use only 1 $A Millions carsales Acquisition Combined • The pro forma balance sheet is presented to show the Current assets 152.2 - 152.2 impact of the Acquisition had it occurred as at 31 December
Slide 29: Equity Raising
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES For personal use only EQUITY RAISING 29 NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES
Slide 30: Overview of the Equity Raising
OVERVIEW OF THE EQUITY RAISING • Fully underwritten 1 for 6.99 pro-rata accelerated renounceable entitlement offer (with retail entitlements trading) to raise gross For personal use only Offer Size and proceeds of approximately A$600m (“Entitlement Offer”) Structure • Approximately 35.3m new ordinar
Slide 31: Equity Raising Timetable
EQUITY RAISING TIMETABLE For personal use only Event Date1 Trading halt and announcement of Entitlement Offer Wednesday, 12 May 2021 Institutional Entitlement Offer opens Wednesday, 12 May 2021 Institutional Entitlement Offer closes Thursday, 13 May 2021 Institutional Entitlement Offer Shortfall boo
Slide 32: Conclusion
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES For personal use only CONCLUSION 32 NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES
Slide 33: Conclusion
CONCLUSION For personal use only ✓ Large and highly attractive markets ✓ High quality business with strong growth potential ✓ Favourable structural trends in digital adoption ✓ Track record of successful international investments ✓ Enhanced diversification ✓ Attractive financial outcomes 33 NOT FOR
Slide 34: Appendix A: Supplementary Financial Information
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES For personal use only APPENDIX A SUPPLEMENTARY FINANCIAL INFORMATION 34 NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES
Slide 35: Adjusted to Reported Financials - carsales
ADJUSTED TO REPORTED FINANCIALS - CARSALES For personal use only FY21 Estimate $A Millions Revenue EBITDA NPAT Reported Financials 422-426 238-242 130-134 Dealer Support Package 10.7 10.7 7.5 Restructuring and M&A transaction costs - 1.1 0.8 Hedge Close out - - 4.2 Total acquired intangible amortisa
Slide 36: Adjusted to Reported Financials CY20 – Trader Interactive
ADJUSTED TO REPORTED FINANCIALS CY20 – TRADER INTERACTIVE LTM1 Ending 31 December Pro-forma transaction adjustments For personal use only 2020, $A Millions Reported Adjustments Adjusted EBITDA 57.9 20.5 78.3 A A. EBITDA: Adjustments primarily include pro forma adjustments for pre-acquisition earning
Slide 37: Appendix B: Key Risks
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES For personal use only APPENDIX B KEY RISKS 37 NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES
Slide 38: Key Risks: Introduction
KEY RISKS INTRODUCTION For personal use only This section sets out some of the key risks associated with an investment in carsales, together with risks relating to participation in the Entitlement Offer which may affect the value of securities in carsales. The risks set out are not listed in order o
Slide 39: Key Risks: Acquisition Specific Risks (continued)
KEY RISKS ACQUISITION SPECIFIC RISKS (continued) For personal use only • carsales has undertaken a due diligence process in relation to Trader Interactive which relied in part on the review of financial and other information provided by Trader Interactive considers this due diligence process to be a
Slide 40: Key Risks: Acquisition Specific Risks (continued)
KEY RISKS ACQUISITION SPECIFIC RISKS (continued) For personal use only • carsales will be acquiring a large interest in a United States-based entity. This Acquisition requires carsales to comply with the onerous laws and regulations of the United States in relation to acquisitions, as well as the la
Slide 41: Key Risks: Acquisition Specific Risks (continued)
KEY RISKS ACQUISITION SPECIFIC RISKS (continued) For personal use only • If the Acquisition completes, carsales will have exposure to any liabilities that Trader Interactive has incurred or agreed to incur in the past, including liabilities in connection with the Acquisition, such as adviser fees, p
Slide 42: Key Risks: Risks Related to Investment in carsales
KEY RISKS RISKS RELATED TO INVESTMENT IN CARSALES For personal use only • carsales derives a significant proportion of its revenue from motor vehicle dealers and automotive manufacturers (OEMs). A change in the size and/or structure of this market could impact carsales’ earnings. In particular, cons
Slide 43: Key Risks: Risks Related to Investment in carsales (continued)
KEY RISKS RISKS RELATED TO INVESTMENT IN CARSALES (continued) For personal use only • The performance of carsales’ websites is very important to the reputation of carsales’ businesses, its ability to attract customers and ability to achieve overall market acceptance of its services. • carsales’ webs
Slide 44: Key Risks: Risks Related to Investment in carsales (continued)
KEY RISKS RISKS RELATED TO INVESTMENT IN CARSALES (continued) For personal use only • carsales’ online businesses are dependent on the ongoing maintenance of the global, regional and local internet infrastructure to provide the necessary data speed, capacity and security to allow it to offer viable
Slide 45: Key Risks: Risks Related to Investment in carsales (continued)
KEY RISKS RISKS RELATED TO INVESTMENT IN CARSALES (continued) For personal use only • carsales relies on service providers for a number of ongoing services, which if terminated might have significant financial and operational implications for carsales’ business. While carsales seeks to manage these
Slide 46: Key Risks: Risks Related to Investment in carsales (continued)
KEY RISKS RISKS RELATED TO INVESTMENT IN CARSALES (continued) For personal use only • carsales relies on the talent and experience of its directors, key senior management and staff generally. The loss of any key personnel could cause disruption to the conduct of carsales’ business in the short term
Slide 47: Key Risks: General Risks
KEY RISKS GENERAL RISKS For personal use only • The payment of dividends in respect of carsales’ shares is impacted by several factors, including carsales’ profitability, capital requirements and free cash flow. Dividends • Any future dividends will be determined by carsales’ board having regard to
Slide 48: Key Risks: General Risks (continued)
KEY RISKS GENERAL RISKS (continued) For personal use only • Investors should be aware that there is no guarantee that the Australian online retail market will continue to grow into the future, or as currently forecast. Growth in the Australian online retail market is expected to be driven partly by
Slide 49: Key Risks: Entitlement Offer Specific Risks
KEY RISKS ENTITLEMENT OFFER SPECIFIC RISKS For personal use only • If an eligible retail shareholder does not take up their entitlements under the Retail Entitlement Offer, then their entitlements will be treated as renounced and there is no guarantee that any value will be received for their renoun
Slide 50: Key Risks: Entitlement Offer Specific Risks (continued)
KEY RISKS ENTITLEMENT OFFER SPECIFIC RISKS (continued) For personal use only • The issue of New Shares under the Entitlement Offer will dilute the interests of ineligible shareholders. Moreover, eligible retail shareholders who do not take up all of their Entitlements under the Retail Entitlement Of
Slide 51: Key Risks: Entitlement Offer Specific Risks (continued)
KEY RISKS ENTITLEMENT OFFER SPECIFIC RISKS (continued) For personal use only • There are general risks associated with investments in equity capital such as carsales shares. The trading price of carsales shares may fluctuate with movements in equity capital markets in Australia and internationally.
Slide 52: Appendix C: International Offer Restrictions
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES For personal use only APPENDIX C INTERNATIONAL OFFER RESTRICTIONS 52 NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES
Slide 53: International Offer Restrictions
INTERNATIONAL OFFER RESTRICTIONS This Presentation does not constitute an offer of entitlements (Entitlements) or new ordinary shares (New Shares) of carsales in any jurisdiction in which it would be unlawful. In For personal use only particular, this Presentation may not be distributed to any perso
Slide 54: International Offer Restrictions
INTERNATIONAL OFFER RESTRICTIONS EUROPEAN UNION (DENMARK, FRANCE, LUXEMBOURG, NETHERLANDS) For personal use only This Presentation has not been, and will not be, registered with or approved by any securities regulator in the European Union. Accordingly, this Presentation may not be made available, n
Slide 55: International Offer Restrictions
INTERNATIONAL OFFER RESTRICTIONS NEW ZEALAND For personal use only This Presentation has not been registered, filed with or approved by any New Zealand regulatory authority under the Financial Markets Conduct Act 2013 (the FMC Act). The Entitlements and the New Shares in the Offer are not being offe
Slide 56: International Offer Restrictions
INTERNATIONAL OFFER RESTRICTIONS SWITZERLAND For personal use only The Entitlements and the New Shares may not be publicly offered in Switzerland and will not be listed on the SIX Swiss Exchange or on any other stock exchange or regulated trading facility in Switzerland. Neither this Presentation no
Slide 57: International Offer Restrictions
INTERNATIONAL OFFER RESTRICTIONS UNITED KINGDOM For personal use only Neither this Presentation nor any other document relating to the offer has been delivered for approval to the Financial Conduct Authority in the United Kingdom and no prospectus (within the meaning of section 85 of the Financial S
Slide 58: Appendix D: Summary of Underwriting Agreement
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES For personal use only APPENDIX D SUMMARY OF UNDERWRITING AGREEMENT 58 NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES
Slide 59: Summary of Underwriting Agreement
SUMMARY OF UNDERWRITING AGREEMENT carsales has entered into an underwriting agreement with the Underwriters in respect of the Entitlement Offer (the Underwriting Agreement). For personal use only The Underwriting Agreement contains customary representations and warranties and indemnities in favour o
Slide 60: Summary of Underwriting Agreement
SUMMARY OF UNDERWRITING AGREEMENT For personal use only • ASX refuses to grant approval for the official quotation of the New Shares or such approval is withdrawn, qualified or withheld before the date of the allotment or issue of the Shares; • carsales becomes required to give or gives a correcting
Slide 61: Summary of Underwriting Agreement
SUMMARY OF UNDERWRITING AGREEMENT For personal use only • an event or circumstance occurs or becomes known that would have required carsales to give ASX a correcting notice under sections 708AA(10) or 708AA(12) (as included in the Corporations Act by the ASIC Instruments) had the cleansing notice be
Slide 62: For personal use only
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES For personal use only 62 NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES