AP Eagers has increased its stake in rival car retail giant Automotive Holdings Group.
As a result of the AHG share price drop this week, AP Eagers has bought $9 million worth of AHG stock, to a 25.8% slice of ownership.
The West points to AHG’s share price dropping to $3 each on Wednesday when AP Eagers swooped in.
It can continue to buy up to 3% every six months under the Corporations Act.
The share price drop occurred after Tuesday’s 10% profit downgrade caused by uncertainty around the $400 million sale of Rand refrigerated logistics to China’s HNA by the June 30 deadline.
East coast-based AP Eagers is the second largest auto retailer after west coast based AHG and cannot buy any greater than a 3% stake every six months without causing a corporate takeover bid.
The process could be made easier if AHG’s 14% annual operating profit drop (to circa-$75m) continues, which the company is already attributing to slow recovery from private car sales declines, and regulatory changes to finance and insurance.
AP Eagers chairman Tim Crommelin says the rise of Mobility as a Service (MaaS), electric vehicles and autonomy has already begun to generate “a degree of uncertainty and tightened margins” in the market, The West reports.
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