A Simpar — a holding owned by Fernando Simões who owns JSL, Vamos, and Movida — has just announced a corporate restructuring that will give rise to a fourth company listed in its portfolio.
Vamos will spin off its truck dealership business, which will be listed from the start, remaining focused only on truck and machinery rental. After the split, this new company will incorporate Automob, Simpar’s network of light vehicle dealerships.
The operation will create a new company with revenues of R$ 12.7 billion (R$ 9.4 billion from Automob and R$ 3.3 billion from Vamos Concessionaires), EBITDA of R$ 418 million, and a net profit of R$ 20 million.
The net debt will be R$ 1.6 billion – or 3.8x EBITDA – considering a fundraising that this new company will have to do to pay for the purchase of Automob.
Automob has 120 stores with brands like Jeep, BMW, Volks, Fiat, Toyota, BYD, Ford, and Hyundai. Vamos Concessionaires has 72 stores with brands like Volks, Fendt, Komatsu, and Valtra.
The operation meets a longstanding demand from Vamos investors, who have always preferred to have a company focused solely on rentals, without the retail component.
“They are removing the retail volatility from Vamos’ business and creating a leading company in the dealership sector that will now be much more diversified,” said a source close to the company.
The acquisition of Automob will be paid partly in cash, and partly in stocks. The new company will pay R$ 1 billion to Simpar for Automob.
After the transaction, Simpar will hold 64.1% of the new company, Vamos’ minority shareholders 21.4%, and Automob’s minority shareholders (owners of acquired dealerships) 14.4%.
Vamos shareholders will receive 0.22 shares of the new company for each share they currently own in the company, in addition to retaining their position in the legacy business.
The new company will be led by the CEO of Automob, Antonio Barreto.
The transaction comes at a time when Vamos’ dealership operation is struggling, mainly impacted by the downturn in the agribusiness cycle. The vertical has been operating in recent quarters with negative EBITDA and net profit.
“The agribusiness sector has deteriorated significantly since last year, and 2023 was a year of technology change, with the introduction of Euro 6. When these changes occur, everyone anticipates purchases on the eve of the technology change, and the first years after the change see lower demand,” said the source. “But over time, things return to normal. The long-term trend for the business is very positive.”
On the other hand, Automob is going through a phase of integrating assets after having grown in recent years through acquisitions that increased revenue from R$ 618 million in 2020 to the current R$ 9.4 billion.
The plan for the new company is to continue with this consolidation strategy — with the added bonus of now being a listed company, which provides a powerful bargaining tool for negotiating new transactions.
For Simpar, the proceeds from the sale of Automob are expected to have a positive impact on its leverage, a major concern for the market.
The holding company, which currently operates with a leverage of 3.3x EBITDA, is expected to reduce this number to 2.5x after the transaction.
To negotiate the terms of the operation, Vamos will establish an independent committee. The operation will still need to be approved by Vamos’ minority shareholders in a general meeting with a date yet to be defined.
Simpar is being advised by Morgan Stanley.
Vamos is advised by BTG Pactual.
Source
Arwen Volkov, A graduate of the University of St. Gallen in Switzerland with a degree in International Finance, Arwen specializes in sustainable finance and green investments. She began her career at an investment bank in London, where she developed financing models for environmentally friendly projects. Known for her analytical and strategic thinking skills, Arwen is a sought-after financial consultant. In her spare time, she mentors fintech startups, contributing to their growth strategies. She is also a nature enthusiast and an amateur photographer.
