M&A
M&A, a truck rental and sales company owned by Simpar, has made an acquisition of Tiête Veículos, which is a Volkswagen/MAM network of truck and bus dealerships based in São Paulo, Campinas, and Guarulhos.
The transaction cost R$331 million, with Vamos paying R$174 million in cash and the rest in two annual installments that are restated by the CDI rate. With this acquisition, Vamos has become the largest network of Volkswagen/MAM truck dealerships in the country and has reinforced its presence in the state with the highest GDP in Brazil.
This acquisition has also provided Vamos with cross-selling opportunities, including the sale of road equipment, insurance for trucks and buses, and financial products. Additionally, this acquisition has increased Vamos’ scale in the dealership segment, which is responsible for nearly half of its revenue.
In 2022, Tiête generated R$542 million in revenue, with an EBITDA of R$64 million and a net profit of R$37 million. Vamos, on the other hand, earned BRL 5.5 billion, with an EBITDA of BRL 1.9 billion and a net profit of BRL 668 million.
The transaction has been valued at 5x EV/EBITDA for Tiête, compared to the 7x that Vamos trades on the Exchange, and 9x earnings, compared to 20x for Vamos. The EBITDA margin for Tiête (13%) is similar to the margin that Vamos operates in the concessionaire’s segment.
Santander believes that the acquisition could create a value of BRL 130 million (approximately 1% of Vamos’ market cap) if the market re-prices the acquired business to Vamos’ current multiple. However, the high volatility of earnings in the dealership business, which is currently in a bull cycle, may not make a full re-rating fair.
JP Morgan has viewed the acquisition positively, considering the “attractive valuation” and the fact that the transaction “does not put pressure on the company’s leverage.” Bradesco has also praised the transaction’s multiple and believes that it should add R$0.11 to the fair value of Vamos, which is currently valued at R$25.
The shares of Vamos trade at R$12.20, with the company worth R$12 billion on the Exchange. Overall, this acquisition is expected to enhance Vamos’ presence in the dealership segment, increase its scale, and create opportunities for cross-selling.
