Randoncorp (RAPT4) M&A Announcement summary

Deal rationale and strategic fit

• Acquisition of AXN Heavy Duty assets marks entry into the North American trailer axle and suspension market, aligning with internationalization and diversification strategy focused on the U.S. and Canada.

• Expands product portfolio and geographic reach, leveraging AXN's strong brand and OEM relationships in the U.S. trailer segment.

• Acquisition provides access to OEMs, potential aftermarket expansion, and exposure to strong currencies.

• Acquisition timed during a market downturn to capitalize on lower valuations and position for recovery.

Financial terms and conditions

• Purchase price of $12.3 million (BRL 74 million), with an additional inventory consignment of $37 million (BRL 223 million) to be acquired over 18 months post-closing.

• AXN generated revenue of $65 million (BRL 390 million) in 2024, with an adjusted EBITDA margin of 5%.

• Funding secured through U.S. credit lines, with debt and revenue both in dollars to create a natural hedge.

• Inventory payment structure is tied to revenue generation and paid as consumed, minimizing working capital risk.

• Asset acquisition valued at a 4.0x EV/EBITDA multiple.

Synergies and expected cost savings

• Estimated $60 million in EBITDA synergies over five years, targeting a post-synergy EBITDA margin of 15-20%.

• Synergies expected from supply chain consolidation, logistics optimization, and leveraging advanced technologies.

• Integration of product lines and aftermarket expansion anticipated to drive margin improvement.

• Asset-light model reduces CapEx needs and enables efficient scaling.

• Acquisition multiple projected to decrease to 0.8x by 2029.