Automotive portal network iCar Asia (ASX: ICQ) has struck a $4.4 million cash deal with Carmudi Indonesia to acquire its vehicle sales website.
The acquisition will be staged over two instalments starting next month with an initial $2.9 million payment and the remaining $1.5 million due 12 months later.
Expected to be finalised next month, the deal will give iCar Asia access to Carmudi’s established advertising and lead generation business which services Indonesia car makers and racks up approximately 2 million website hits per month.
It will add to iCar’s current monthly online visits of 6 million, with a “low overlap” of approximately 20% between the audiences of both companies.
It will also give iCar Asia the opportunity to expand its used car business with one of Indonesia’s leading vertical automotive sites Carmudi.co.id.
Carmudi operates five car yards across Indonesia, known as “Carsentros”, which operate as a transaction platform for car dealers and car financiers, and generate finance commission income.
With the combined audience and iCar Asia’s existing new car businesses, the acquisition is expected to create a “powerful advertising platform” for Indonesia’s car industry.
It is also expected to more than double iCar Asia’s revenue from its Indonesian businesses and increase growth rates, with synergies from both businesses speculated to break even in 2020.
iCar reported it is still on track for earnings before interest, tax, depreciation and amortisation break even by the end of 2019.
Chief executive Hamish Stone said the Carmudi acquisition would be a good strategic fit for the company.
“We are delighted to have Carmudi Indonesia join [us] and further strengthen our position in Indonesia’s new and used car segments,” he said.
“This acquisition furthers our vision of being the platform that people turn to in order solve their automotive needs.”
iCar Asia owns and operates a network of automotive portals throughout southeast Asia.
Headquartered in Kuala Lumpur, the company develops and operates automotive portals in Malaysia, Indonesia and Thailand and currently reaches 12 million car buyers and sellers every month.
At mid-afternoon, shares in iCar Asia were up 10.42% to $0.265.