Carsales.com is set to acquire 49.9% of South Korean company SK Encar in a deal worth $126 million, as the company strengthens its position in the Korean market.
Yesterday Carsales.com announced it would seek a large stake in the online assets of SK Encar, a South Korean automotive trading business, including popular website encar.com, which is reportedly the most popular online automotive trading website in South Korea.
Under the deal, SK Encar’s online assets will be transferred to a new company called SK Encarsales.com. Shareholders responded well to the news, with shares yesterday rising to a record high of $11.97 after coming out of a trading halt.
According to the analytic website SimilarWeb, encar.com received around 200,000 visits per week during the month of January.
Carsales.com began the online car advertising revolution in 2002 and continues to hold a dominant position in the Australian market. The business works in a similar way to printed classifieds, with the added benefit of being free for consumers to access – unlike classifieds printed in newspapers.
Chief executive and managing director Greg Roebuck said in a statement the transition represented a “significant and exciting opportunity” and was an important step in solidifying the company’s long-term growth and vision to become a global leader in automotive classifieds.
“Korea is a developed market with strong growth fundamentals and very sophisticated technology take-up,” he says.
“More than 1.6 million new vehicles are expected to be sold in South Korea in 2014 – nearly 60% more than in Australia during the same period.”
Last month, carsales.com announced a half-year net profit of $44 million after tax, a 17% increase compared to the previous corresponding period. Total operating revenue for the period was up 10% to $112.3 million.
In 2012, Roebuck told SmartCompany that one of his strategies was to expand on the original car sales website to include other product categories such as bikes and caravans.
The company also responded to market demand for mobile technology. Carsales.com’s downloadable app is the second most popular car-selling website in Australia (topped only by their desktop website).
“Consumers love mobile,” he said at the time. “We want to make sure we’re market leaders.”