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Virgin Australia Bain Capital Owner Raises offer to $1.8 billion for Auto Components Company Bapcor

Beaten-down Autobarn owner Bapcor is considering a $1.83 billion buyout offer from private equity giant Bain Capital. The vehicle parts and accessories business, which also operates the Burson, Autopro, and Midas brands, confirmed the unsolicited, conditional, and non-binding $5.40-a-share bid to investors on Tuesday. However, the board is still evaluating the proposal.

Bapcor shares hit a four-year low early last month, plummeting 35 percent after forecasting a full-year profit drop of up to $32 million compared to the previous year. The stock has struggled to recover over the past four weeks, but news of a possible deal with Bain Capital, the owner of Virgin Australia, boosted shares by 11 percent in early trade to $4.83.

“The board cautions that at this time there is no guarantee that the indicative proposal put forward by Bain Capital will result in a binding offer or that any transaction will eventuate,” Bapcor stated. The board has appointed Macquarie Capital as financial adviser and Allens as legal adviser.

Bapcor’s network of 1100 stores markets to mechanics and car and 4WD enthusiasts. Last month, the company warned that second-half profit would be below the first-half’s $54.2 million, with the full financial year result likely to be between $93 million and $97 million. The weaker performance was attributed to challenging trading conditions in its retail business, higher interest costs, and pressure on its wholesale business from competitors like Super Retail Group, owner of Supercheap Auto.

Bapcor originated from Burson Group, which opened its first store in Victoria in 1978 and its 50th store in 2004. Co-founder Gerry Johnson sold the business to private equity group Quadrant in 2011. Bapcor listed on the Australian Securities Exchange in 2014 and quickly expanded through a series of acquisitions.

Gerry Johnson, who remains invested in Bapcor, told the Australian Financial Review that Bain’s $5.40-a-share offer was too low and criticized the company’s leadership. “The price is below fair value given the opportunities ahead of it, if it was run properly,” he said. “I’m angry and disappointed that it has come to this. A once-great company, after a couple of years of poor management, shouldn’t be in this position.”

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