Bain Capital makes $1.83b takeover offer for struggling car parts business Bapcor

Aftermarket car parts supplier Bapcor (ASX: BAP) has received a $1.83 billion takeover proposal from private equity firm Bain Capital.

The offer was put forward after the Australian share market closed on Friday.

Under the terms of the deal, Bapcor investors would receive $5.40 cash per share, representing a 23.9% premium to the company’s last closing price.

Car parts leader

Bapcor is the parent company of car parts outlet Autobarn and the leading provider of vehicle parts, accessories and equipment to the Asia Pacific region.

It also owns car servicing businesses Midas, ABAS, Shock Shop and Battery Town.

Known as Burson Group until 2016, Bapcor made its ASX debut at $1.82 in 2014.

Difficult conditions

Bain’s offer comes at a time when Bapcor is struggling to improve its performance amid difficult trading conditions and senior management departures.

The company’s shares have dropped 21% this year and have recently been trading at lows last seen in April 2020.

Bapcor said in May that challenging retail performance and worries about competitive pricing had led to pressure on volume and margin in the face of rising expenses.

It issued a warning that second-half 2024 profits would be lower than first-half earnings.

‘Once-great company’

Major Bapcor investor and Burson co-founder Garry Johnson believes Bain’s offer is pitched too low.

“The price is below fair value, given the opportunities ahead of Bapcor if it were run properly,” he said.

“I am disappointed it has come to this… a once-great company, after a couple of years of poor management, should not be in this position.”

Some analysts have suggested that, given the premium Bain is offering, the acquisition might bring Bapcor’s shareholders a substantial boost.

Bapcor’s board advised shareholders to carefully consider the offer before making any choices.

Leadership changes

Bapcor’s performance woes appear to have fuelled a leadership shake-up.

The company recently confirmed that experienced auto parts executive Paul Dumbrell — who was appointed to the role of Bapcor chief executive officer in February — would not be joining the organisation as planned.

The announcement was made two days before Mr Dumbrell was due to take over from former chief executive officer Noel Meehan, who stepped down from the role in February citing personal reasons.

Bapcor said Mr Dumbrell had made a “personal decision” not to join the company.

Bapcor non-executive director Mark Bernhard will act as interim chief executive officer and managing director while the board begins a new executive search.

In another blow for the company, board chair Margie Haseltine advised she would not be seeking re-election at this year’s annual general meeting.

Ms Haseltine has been a non-executive director since 2016 and chair since 2021.