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Wheels are in motion for Australian insurance giant Suncorp to offload its vehicle repair business.
The company, which is looking to focus on its core businesses of insurance and banking, is set to offload Capital S.M.A.R.T for AU$420 million to smash repairs firm AMA Group, according to a Reuters report. The move comes less than a month after Steve Johnston stepped into the role of chief executive after Michael Cameron’s surprise exit back in May.
Suncorp is hoping to secure an after-tax profit of between AU$275 million and AU$295 million on the back of the divestment – it is also set to retain a 10% stake.
“The increasing complexity of repairs is driving significant change in the smash-repair and parts-procurement industry, and the divestment means Suncorp can focus on its core insurance and banking operations,” said Johnston, as quoted by the newswire.
In addition, a 25-year service agreement with Capital S.M.A.R.T, which also incorporates two further five-year renewal options, has been established that Suncorp believes will allow both it and AMA to thrive going forward.
AMA is set to fund the deal through a AU$216 million capital raising plan – it is also set to pick up Suncorp’s auto parts supply division ACM Parts for a further AU$20 million.
