Mills is buying forklift company JM for R$279 million, entering a new vertical and increasing its addressable market from R$45 billion to R$59 billion.
After a four-month negotiation, Mills is paying 4.3x EBITDA for JM – below the multiple at which Mills itself trades, of 5.4x.
Payment will be made 50% upfront and in cash, 30% in three years and 20% through a earnout until 2030.
The deal still needs approval from CADE, which should take around 60 days.
JM is a company from Lençóis Paulista, in the interior of São Paulo, but operates throughout the national territory from five branches.
“In addition to entering a new segment, JM has a lot of exposure to agribusiness, around 45% of revenue, which is very attractive for us,” CEO Sergio Kariya told Brazil Journal.
In addition, Mills will also see a significant increase in the share of the yellow line in its results.
The company debuted in the segment – which also includes tractors and backhoe loaders – in 2022 with the purchase of Triengel and, since then, it has quadrupled its fleet. With the purchase of JM, the yellow line will go from 10% to 15% of revenue – and the goal is to reach 20% by the end of the year.
Mills’ main business continues to be leasing aerial platforms to large companies.
According to Kariya, JM will help the company meet the demand for forklifts from its current customer base: 60% of them have a forklift in their operations.
“We have an addressable market and a very close cross-sell,” he said.
The executive also remembers that a focus for Mills in recent quarters was increasing duration of contracts, and JM will also help with this: its average contract term is between 3 and 5 years.
After today’s purchase, Mills’ leverage will rise from 0.5x to 0.8x, and the CEO said he plans more acquisitions.
Mills released its first quarter results last night, which came in below consensus, especially in revenue.
Net revenue rose 8.5% year-on-year to R$353.2 million. EBITDA grew 5%, to R$169.4 million – but with the margin falling 1.7 points, to 48%.
According to Kariya, there was the impact of seasonality with the rainy season and the off-season on agribusiness.
Margins were also impacted by the sales of machinery after the end of some contracts, which caused depreciation to appear on the balance sheet.
Mills shares rise 47% in 12 months. The company is worth R$3.4 billion on the stock exchange.
Mills had Artica as financial advisor and Veirano as legal advisor.
JM was advised by VGRI Partners.
André Jankavski
