SYDNEY--Eagers Automotive moved to expand into Canada through a strategic investment of 1.04 billion Australian dollars (US$690 million) in CanadaOne Auto, one of the largest car dealerships in the North American country.

Eagers said it would fund the deal for a 65% stake in CanadaOne Auto through a A$452 million entitlement offer that is partially underwritten. New shares would be issued at A$21.00 each, representing a 28% discount to Tuesday's close.

Eagers said it would also issue exchangeable shares worth A$386 million to an entity controlled by CanadaOne Auto founder Pat Priestner, who will continue to own 35% of the Canadian company once the investment completes.

The remaining funding largely comprises a A$50 million share placement to Japan's Mitsubishi Corp., which is also acquiring a 20% interest in Eagers's easyauto123 used-car business for A$70 million.

CanadaOne Auto has 42 dealerships across five Canadian provinces. It sells auto brands including Toyota, Ford and General Motors, and owns the freehold to properties worth some A$714 million.

Eagers said CanadaOne Auto is highly profitable, with an adjusted profit before tax of A$221 million in the 12 months through June. CanadaOne Auto's revenue in that period totalled A$5.5 billion.

"Our objective has been to pursue international growth in the best market with the best partner," said Eagers Chief Executive Keith Thornton, citing CanadaOne's profitable growth and deep industry experience.