Connexion Mobility Buys Melbourne Auto Workshop in 25–35% EPS Accretive Deal
Connexion Mobility acquires Melbourne automotive business in earnings-accretive deal
Connexion Mobility Ltd (ASX: CXZ) has entered a definitive agreement to acquire 100% of the assets of Hallam Road Automotive (HRA), a premier independent service and repair centre in Melbourne’s South-East. Total consideration is approximately A$5.0m (US$3.5m), comprising an upfront cash payment of approximately A$4.0m (US$2.8m) and a performance-based earn-out of approximately A$1.0m (US$0.7m) payable over 12 months. The acquisition is expected to be immediately EPS accretive in the order of 25–35%, off a base of USD 0.30 cents per share (FY2025 Annual Report), with completion anticipated in May 2026, subject to third-party consents and approvals.
CEO Aaryn Nania
“Hallam Road Automotive is a high-performing operation in a growing and resilient industry, whose risk-profile complements Connexion’s. The teams at both companies share a passion for improving customer experiences surrounding automotive service & repair, and we are delighted to have the opportunity to own a local, industry leader of the calibre of Hallam Road Automotive. We look forward to being a supportive operating partner for many years ahead.”
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Why Connexion is buying an automotive workshop
Connexion’s stated objective is to maximise shareholder value, defined as the size, sustainability, and diversification of its earnings per share. The acquisition of HRA represents a deliberate capital deployment decision fully consistent with that framework, not a departure from it.
Deploying cash into higher-returning operating assets
Connexion reported Net Cash & Investments (NCI) of US$5.6m at the end of March 2026. Excluding the company’s equity holding in Covertrue, the pre-tax return from the cash and managed funds component was falling below the company’s long-term Required Rate of Return. Redeploying a portion of that capital into an operating asset with demonstrated earnings growth reflects disciplined capital allocation.
Reducing AUD/USD foreign exchange risk
Connexion has long carried operational exposure to AUD/USD movements, and that risk has grown more immediate. The AUD/USD has already risen approximately 15% over the past twelve months. Management estimates that a move from 70c to 80c (a level reached in both 2021 and 2018, and exceeded throughout 2004–2015) would reduce ongoing Net Profit Before Tax by approximately US$0.7m. Because HRA generates AUD-denominated earnings, the acquisition directly hedges this exposure.
HRA meets all of Connexion’s Platform Company criteria, specifically:
- A business Connexion can understand and add value to
- Well-established, capable management in place
- Attractive balance of growth and profitability
- Diverse revenue streams (commercial approximately 60%, retail approximately 40%)
- AUD-denominated earnings
- Acquired at a valuation meeting Connexion’s internal Required Rate of Return
Inside Hallam Road Automotive: 22 years of compounding quality
A necessity-driven, growing market
The Australian automotive service and repair industry operates as an essential, non-discretionary sector. Vehicles must be serviced to maintain safety compliance, warranty validity, and resale value, regardless of broader economic conditions. Several structural factors reinforce the long-term demand outlook:
- Necessity-driven demand: Automotive servicing is non-discretionary, tied directly to vehicle safety, warranty compliance, and resale value
- Ageing vehicle fleet: The average age of Australian vehicles is approximately 11.6 years (Bureau of Infrastructure and Transport Research Economics, 2025), driving higher per-vehicle repair and maintenance spend
- Technological complexity: Modern vehicles require sophisticated diagnostic equipment and skilled labour, creating meaningful barriers to entry for lower-quality operators
- Right to Repair legislation: Australia’s Motor Vehicle Information Scheme (July 2022) mandates that OEMs share technical repair data with independent workshops at fair market prices; consumers may use any qualified mechanic without voiding warranties. The Federal Government provided further support to the scheme in February 2026, with connected car data access also on the agenda
- Fleet synergy: Independent workshops are increasingly preferred by small-to-mid-sized fleets for cost-effectiveness and personalised service compared to OEM dealerships
What makes HRA a standout operator
HRA has recorded an estimated revenue compound annual growth rate (CAGR) of 15% and a Net Profit Before Tax CAGR of 24% over the FY2019–FY2027 period. The table below summarises the business’s key operational attributes.
| Attribute | Detail | Significance | Investment Read |
|---|---|---|---|
| Longevity | Operating for over 22 years | Deep community roots and a “sticky” repeat customer base | Reduces customer attrition risk post-acquisition |
| Facility | Nine-bay workshop in an elevated position on Hallam Road | Physical capacity for both high-volume servicing and complex repairs | Supports revenue diversification across service types |
| Team | 11 staff; employer-of-choice operating model | Addresses the nationwide shortage of skilled technicians | Labour continuity underpins earnings sustainability |
| Certifications | VACC standards adherence; logbook servicing authority; Roadworthy Certificate issuer (Transport Victoria) | Authorised to service vehicles without voiding new-car warranties | Expands addressable market to include newer vehicles |
| Revenue split | Approximately 60% commercial / 40% retail | Commercial base provides workflow stability; retail adds breadth | Diversified customer mix limits concentration risk |
Elie Chakkour, Founder of Hallam Road Automotive
“Having built Hallam Road Automotive with my late father, George Chakkour, I am extremely proud of what our team has achieved over the past 25 years. As a family business, it was important to us that we transitioned ownership to a company that would ensure our staff, suppliers and customers were in good hands. We are pleased to have found a partner, in Connexion, that respects the history and values of our business. Our team of technicians and service staff have a fantastic opportunity for training and career development within the Connexion Mobility group. I look forward to working closely with Connexion over the coming year, to continue driving the excellent service that our loyal customers enjoy at Hallam Road Automotive.”
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What the deal means for Connexion shareholders
Immediate financial impact
- EPS accretion of 25–35% is expected immediately upon acquisition, based on a starting EPS of USD 0.30 cents (FY2025 Annual Report)
- HRA’s full profit and loss will be consolidated into Connexion’s financials (converted to USD), which differs from the treatment of the minority Covertrue holding, recognised under Other Income
- Connexion retains substantial liquid assets post financial-close after deploying internal cash and drawing the A$2.5m NAB amortising debt facility
- Connexion is currently 3–4 years from having distributable franking credits due to an existing franking credit balance deficit; the HRA acquisition is expected to materially reduce this timeframe
Strategic optionality post-acquisition
Beyond the base case of maintaining HRA’s current operating performance with inflation-linked growth, management has identified several areas of potential future value creation. These are presented as opportunities, not confirmed outcomes:
- Selective bolt-on acquisitions of additional service and repair businesses
- HRA as a local test-bed for Connexion software, supporting the training of its Product and Engineering teams
- Greater ability to identify and engage with automotive software targets and partners
- Intentional investment in HRA’s digital presence, technology, and strategic industry partnerships
- As Mr Chakkour is progressively relieved of day-to-day operations, a potential transition into more strategic commercial sales support
On the question of management continuity, Mr Elie Chakkour has committed to a 12-month paid handover consultancy to ensure a seamless transition of operations and key commercial relationships. Connexion has incorporated a wholly owned subsidiary, Connexion Services Pty Ltd, to undertake the acquisition.
Completion is anticipated in May 2026, subject to third-party consents including any approvals required under the ASX Listing Rules, execution of the property lease, and execution of employment agreements with key personnel including Mr Chakkour.
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