The Bapcor Ltd (ASX: BAP) share price is on watch this morning after a key acquisition announcement by the Aussie automotive group.
What did Bapcor announce?
Bapcor has signed agreements to purchase both Truckline and Diesel Drive for a combined $48 million.
Truckline is an Aussie heavy commercial truck spare parts business operating around Australia with revenues of around $100 million.
Diesel Drive is a Sydney-based Japanese commercial truck spare parts business with revenues of approximately $13 million.
The acquisitions are to set to expand Bapcor's existing wholesale business and grow its footprint in Japan.
The Bapcor share price will be one to watch in early trade today following the expansion news.
How will Bapcor fund the purchase?
The company is expected to use $48 million from its existing debt facilities.
Bapcor expects to achieve a return on investment (ROI) of at least 15% in the first year of full operation in FY21.
The acquisition is in line with Bapcor's strategic direction as it looks to build out its Japanese footprint.
How will the Bapcor share price react?
It's often hard to tell which way the market will go with acquisitions and the Bapcor share price will be on watch this morning.
Bapcor shares could climb higher in early trade given the high potential ROI forecast by management.
Bapcor boasts a market cap of $2.03 billion and recently posted a $94.3 pro-forma net profit in August 2019.
The $48 million purchase price does seem like a drop in the ocean for the Aussie automotive parts supplier.
How has the Bapcor share price performed in 2019?
The Bapcor share price has climbed 22.22% higher so far this year to just outperform the S&P/ASX 200 Index (INDEXASX: XJO).
The company's shares opened today at $7.15 per share and have already lifted to $7.22 at time of writing, trading at 21.07x earnings with a 2.35% net dividend yield.
Bapcor's market cap currently sits at approximately $2 billion at the time of writing.
