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Vertu buys Co-Op's Land Rover sites

Vertu Motors is acquiring the three Farnell Land Rover dealerships of Co-operative Motor Group in a £31m deal.

The dealerships, in addition to a premium brand used car site, will operate as a new division within Vertu, headed up by current operations manager Jatinder Aujla.

The acquisition was funded through a raising of £50m through a placing of 131.6m shares at 38p per share, completed this morning.

Vertu said Farnell had a consistent record of profitability and cash generation.

In 2012 the businesses posted revenues of approximately £113m and operating profit of £3.9m.

"We are very pleased to announce the acquisition of Farnell, a dealership group with over 65 years' history in Yorkshire,” said Vertu chief executive Robert Forrester.

"The acquisition is expected to be earnings enhancing in its first full year, is a high quality business and has a leading franchise in a large market area. We welcome Jatinder Aujla, the current head of Farnell, and his colleagues to the group, and I am particularly pleased that Jatinder will head the newly established division and report to me."

Forrester added that since Vertu was established in 2006, its strategy has been to build a "highly respected UK automotive retail group by leveraging our scalable business model to acquire dealerships with high potential".

"We have grown the business to 96 sites at the end of February 2013, partnering with many leading motor manufacturers, selling close to 95,000 vehicles a year," he said.

"The acquisition we announce today already performs at a very high level and reflects our first entry into the exciting British premium marque of Land Rover.

"We are very pleased to have received the support of existing and new shareholders for our capital raise, which both funds the acquisition and provides substantial equity funding that maintains our strong financial position and enables us to take greater advantage of acquisition opportunities to expand the group in the highly fragmented premium and volume segments of the market."
 

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Comments

  • Chilli Pepper - 21/05/2013 20:44

    I heard that in the £31m deal there were £12m of assets and £19m goodwill! Wow!!!! I wonder how long Vertu will write that off over?

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    • Jim - 22/05/2013 08:31

      @Chilli Pepper - good point, but the earnings to share price is pretty good + there is some land too. I want to see margins improve so that amortisation is comfortably absorbed.

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  • Jim - 22/05/2013 08:27

    Although on the face of it this seems an opportune acquisition, I am left wondering why this was not funded by debt. Debt financing is at historic lows. If I look at the performance of Vertu I do not see a great improvement in margins or efficiency. We should be seeing more of these scaleable improvements by now. I appreciate the business model, like all the corporate HQ media (like the video), but as a shareholder I am becomimg worried that I may be investing in a vanity project rather than a growing and profitable company that will give me a return for the risk I am taking. Please Mr Forrester make sure all this spending on training and building scale starts to improve the bottom line and gets the share price moving. The dilution of my equity stake is a worry - spend the money wisely!.

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