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Vertu Motors acquires The Taxi Centre

Vertu Motors has announced its takeover of The Taxi Centre, a business in Paisley, Scotland, which sources vehicles for private operators in the taxi sector.

The acquisition includes Easy Vehicle Finance.

Total consideration, which includes £1.1m of goodwill, is estimated at £0.7m of which £0.2m will be settled by the issue of 343,053 ordinary shares in Vertu at 58.3 pence per share, with the balance settled in cash from the group's existing resources.

There is an earn-out arrangement whereby the vendor will earn 20% of the pre-tax profits of the Taxi Centre over a three year period after completion. The assets acquired include a short leasehold office property. 

In 2013, the management accounts of the Taxi Centre showed revenue of £9.7m and EBITDA of £0.4m.

Vertu said the board expects this acquisition to be earnings enhancing in its first full year of ownership and is confident the Vertu Group will drive future profit growth.

Robert Forrester, Vertu Motors chief executive, said: "The group is confident that the acquisition of this cash generative business will produce profit enhancing synergy opportunities in the supply of new and used vehicles.  We look forward to welcoming the experienced Taxi Centre team into the growing Vertu Group."

Analyst Mike Allen at Zeus Capital, which acts as a broker to Vertu, said: "Vertu has made an acquisition of a specialist broker to the private taxi sector, of what looks to be an above average, cash generative business at an attractive valuation.

"There should be good scope to expand and improve this business as it uses its online expertise while also expanding its customer offer into the used vehicle sector.

"We have not adjusted our forecasts on the back of this transaction as we anticipate the impact on group profitability will be initially small.

"The shares continue to look undervalued to us, and with further M&A activity likely as it unlocks value from its cash rich balance sheet, we maintain a positive stance on the shares."

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