Vamos — the truck rental and sales company controlled by Simpar — has just acquired Tiête Veículos, paying R$331 million for a Volkswagen/MAM network of truck and bus dealerships with operations in São Paulo, Campinas and Guarulhos.
The transaction values Tiete at 5x EV/EBITDA, compared to 7x that Vamos trades on the Exchange, and 9x earnings, compared to 20x for Vamos.
Vamos will pay R$174 million in cash and the remainder in two annual installments restated by the CDI rate.
With the acquisition, Vamos strengthens its position as the largest dealership network for Volkswagen/MAM trucks and reinforces its presence in the state with the highest GDP in the country.
The transaction also brings opportunities to cross-sellwith the sale of road equipment (through Truckvan), insurance for trucks and buses (through Madre Corretora), and financial products (through Banco BBC).
Finally, the acquisition also increases Vamos’ scale in the dealership segment, which accounts for nearly half of Vamos’ revenues. (The other half comes from leasing trucks, buses and machines).
Last year, Tiete had revenues of R$542 million, with an EBITDA of R$64 million and a net profit of R$37 million. The company has a net cash position of R$11 million.
Vamos earned BRL 5.5 billion, with an EBITDA of BRL 1.9 billion and a net profit of BRL 668 million.
Tiete’s EBITDA margin (13%) is similar to the margin that Vamos operates in the concessionaires segment.
“If the market completely re-prices the acquired business to the current multiple of Vamos, we estimate a value creation of BRL 130 million (around 1% of Vamos’ market cap),” Santander wrote. “However, we don’t see a re-rating complete as fair given the high volatility of earnings in the dealership business, which is now in a bull cycle.”
For JP Morgan, the transaction was positive considering the “attractive valuation” and the fact that the transaction “does not put pressure on the company’s leverage,” which the bank estimates should end the year at 3.4x.
Bradesco also praised the multiple of the transaction and said that it should add R$0.11 to the fair value of Vamos, of R$25.
The shares of Vamos trade at R$ 12.20, with the company worth R$ 12 billion on the Exchange.
Peter Arbex