June 17, 2016 — Those Canadian tech companies suddenly are hot. A sale of Trader Corp., the parent of autoTRADER.ca, could be announced in the next few weeks, sources close to the deal confirm to TBR. Potential buyers, including large private equity firms along with strategic buyers based in the U.S., are nearing the final bidding process for the Canadian-based Trader Corp. which likely will command a price in the neighborhood of $1.5 billion in the sale.
In late December, IHS paid $460 million for Carproof, a company that provides services similar to Carfax to Canadian car buyers and dealers.
Trader Corp. currently is owned by Apax Partners. The private equity firm acquired Trader Corp. in 2011 for $575 million from Yellow Media, which also included a 30% stake in Dealer.com. Apax sold its investment in Dealer.com in December 2013 as part of the website company’s sale to Dealertrack.
Trader Corp. is the equivalent to Autotrader in the U.S. and offers digital advertising solutions to dealers. Monthly traffic to autoTRADER.ca is approximately 14 million visits.
The sales process, which we’re told has turned into a seller’s auction driving the price up, reflects the dearth of attractive tech companies in the automotive space this year. Large private equity companies aren’t interested unless the revenue or EBITDA can command multiples pushing the price above $1 billion and not many companies are in that category.
Meanwhile, strategic buyers are looking for firms that can immediately add to their bottom line in addition to providing more solutions to sell. Nevertheless, the M&A market in automotive retail could be interesting over the next six months or so as private equity appears ready for another round of aggressive deals.