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Transactional Capital begins WeBuyCars takeover discussions

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Investor group Transactional Capital has opened formal negotiations with WBC Holdings to acquire controlling shares in online vehicle retailer WeBuyCars.

The JSE-listed Transactional Capital announced today that it’s seeking to increase its stake in WeBuyCars from the current 49.9% shareholding to 74.9% and take charge of the online retailer.

WeBuyCars is a dealer in used vehicles in SA. It purchases used vehicles mainly from private sellers and then on-sells them to used car dealers and private consumers.

In a note to shareholders, the company advised that discussions with WeBuyCars had begun and if successful, it expects to conclude the deal in the near future.

Transactional Capital, which released its financial results for the six months ended March 2021, says its investment in WeBuyCars “continues to demonstrate resilience and relevance”.

“We expect our additional investment of 25% in WeBuyCars, which is subject to Competition Commission approval, to be immediately value and earnings accretive. Should the acquisition of a greater shareholding in WeBuyCars be concluded, the group will be able to consolidate a greater proportion of WeBuyCars's high-growth earnings. We believe the exceptional growth prospects of this business will accelerate and support a sustainably higher growth trajectory for the group.”

The company says in the six months, WeBuyCars’s revenue and profit showed strong compound annual growth rates of 38% and 43%, respectively, in the last three years.

It says the strategy by WeBuyCars to grow the e-commerce offering and drive higher penetration of finance, insurance and allied products continues to yield results, “with new heights reached in total revenue and units bought and sold in the period”.

The medium-term target to increase the volume of vehicles traded to 10 000 per month is on track and it has plans “to develop additional vehicle supermarkets and buying pods in select high-demand locations across South Africa”.

According to Transactional Capital, the WeBuyCars platform also facilitates business-to-business trading with vehicle dealerships, with sales via this platform growing to now account for 40% of total vehicle sales.

“The e-commerce platform also offers early-stage business-to-consumer capabilities that will support growth, as demand for contactless services on credible digital platforms escalates,” says the company.

Transactional Capital says should the acquisition of a greater shareholding in WeBuyCars be concluded, this will provide the group with a greater share of earnings in a highly relevant business with exceptional growth prospects.

“We are confident this business will accelerate and support a sustainably higher growth trajectory for the group.”

The announcement today by Transactional Capital comes a year after the Competition Tribunal scuppered plans by Naspers to wrest control of WeBuyCars.

Naspers-owned MIH eCommerce wanted to acquire 60% of WeBuyCars but the deal was halted by competition authorities.

The Competition Commission recommended the proposed transaction be prohibited as it was likely to substantially prevent or lessen competition.

MIH eCommerce has investments in OLX and Car Trader, which operates as AutoTrader.

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