WeBuyCars deal changed

Transaction Capital has changed its planned accelerated transaction to buy a further 15% of WeBuyCars after the company’s dramatic share price decline over the past week.

In September last year, Transaction Capital announced its plans to increase its holding of WeBuyCars by a further 15%.

Transaction Capital expected to finance around 30% of the accelerated purchase by issuing shares to the vendors. However, the share price decline changed its plans.

It is still planning to proceed with the acquisition, but the deal will look different from last year’s plans.

“In light of the current share price, the board has resolved not to issue Transaction Capital shares at this time,” it said.

“As such, the accelerated transaction will not be concluded as previously communicated to shareholders. This is in agreement with the vendors.”

A further consequence of this decision is the company retaining the cash portion of the purchase consideration.

The acquisition of the additional 15% stake in WeBuyCars will now be made in accordance with the existing put and call arrangements.

This enables the purchase of this 15% stake in two equal tranches in September 2023 and September 2024.

Transaction Capital’s share price plummeted after a poor trading update was released last Monday.

The company expected its earnings per share to decrease by 20% to 50% when it next reports financial results. 

Today, it narrowed the band of its earnings per share decrease expectations to between 41% and 46%.

It expects a stronger second half of the year that will result in an earnings per share decrease of between 19% and 23% in September 2023 compared to the year before. 

The company provided assurances that the board is comfortable with its current liquidity position.