Repco to buy Alesco Automotive

Ingram and McLeod are strong trade businesses operating in the areas of:

The purchase price is $89.5 million, on a cash free/debt free basis with settlement scheduled to occur on 31 December 2004. The purchase price together with associated transaction and restructuring costs will be funded by a $50-60 million equity raising and the balance with debt.

As a result of the acquisition and identified synergies, Repco expects immediate EPS accretion (pre amortisation and one-off costs), at least 5% accretion in FY2006 and up to 10% in FY2007. The purchase price represents a 7.9 times multiple of EBITA (based on EBITA for the 12 months ending 30 November 2004 of $11.3 million (1)). Including the benefit of synergies would result in an EBITA multiple of less than 6 times.

Repco's Managing Director, Peter Mummery, said the acquisition was consistent with Repco's strategy of being the leading automotive aftermarket participant in Australia and New Zealand. In addition, it demonstrates Repco's commitment to capitalising upon its leading market position to drive industry consolidation.

The Ingram business is complementary to Repco's existing specialist business - Ashdown, which is the market leader in the supply of automotive electrical products to trade repairers in Australia.

"The combined businesses will raise opportunities for significant synergy benefits including cost savings, supply chain efficiencies and procurement gains," Mummery added.

Repco estimates potential net cost synergies (pre-tax) from the combined business will generate up to $4.5 million (annualised) by the end of FY2006 with the full year benefit realised in FY2007.

The equity raising will be achieved by way of a $50 million institutional placement, underwritten by UBS, combined with a non-underwritten Share Purchase Plan ("SPP") for up to $10 million. Additionally, a new $40 million term loan has been negotiated in order to facilitate the transaction, and will bolt on to existing facilities.

The issue price per share for the institutional placement will be determined via a bookbuild process which is expected to be finalised later today, with these new shares to commence trading on Wednesday 22 December 2004.

The SPP will give Repco's retail shareholders the opportunity to acquire up to $5,000 of new shares at the institutional placement price. The record date for the SPP will be Monday 20 December 2004 with final acceptances due by Monday 31 January 2005. Documentation in relation to the SPP will be sent to shareholders early in the new year.

"We reaffirm Repco's FY2005 EBITDA target is in the range of $76 to $80 million, as previously advised at the AGM in October. Trading in November and early December has continued the positive trend seen during the month of October", Mummery said.

UBS acted as sole financial adviser to Repco in relation to the acquisition.

(1) Comprises actual statutory EBITA for 6 months ending 31 May 2004 and unaudited management EBITA for 6 months ending 30 November 2004

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