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Vertu Motors acquires six site Hughes Group for £21.8m

Vertu Motors' CEO Robert Forrester

Vertu Motors has acquired Hughes Group and its subsidiary Hughes of Beaconsfield for £21.8 million.

The deal, Vertu’s first in over two years, includes six sites and takes the company's dealership portfolio to 125 across the UK.

Vertu’s board expects the deal to be earnings enhancing in their first year. The management team at Hughes will remain in place following the acquisition.

Hughes has represented Mercedes-Benz for over 40 years, operating outlets in Beaconsfield and Aylesbury, which is an adjacent market area to Vertu's existing Mercedes-Benz operations in Reading, Ascot and Slough.

The acquisition also brings the Mercedes-Benz Commercial Van franchise to the group for the first time through the operation in Aylesbury.

Hughes also operates outlets for Skoda in Aylesbury, Jeep in Beaconsfield and Peugeot in High Wycombe and operates a vehicle preparation centre in Wendover.

The Aylesbury and High Wycombe dealerships and the preparation centre in Wendover are freehold premises.

The Beaconsfield dealership operates from leasehold premises, and a new lease has been agreed.

For the year ended 31 December 2017, Hughes achieved revenues of £150m, EBITDA of £2.8m, PBT of £2.1m and had net assets of £13.7m.

The estimated cash consideration of £21.8m has been funded from the Vertu’s existing cash resources and borrowing facilities.  

The consideration comprises net assets of £12.0m (including freehold properties of £6.2m) and a payment for goodwill of £9.8m. In addition, the group has taken on the Hughes' indebtedness, including used car stocking loans, of £3.5m.

Robert Forrester, Vertu Motors chief executive, said the Mercedes-Benz dealerships represent a further step in the growth of its premium business.

He said: “We also welcome the opportunity to further develop our relationship with Skoda, Peugeot and Jeep.

"The Hughes business has operated in the Beaconsfield area for over 40 years, and is very well established in this attractive market area, serving an excellent demographic profile for the Mercedes-Benz brand.

"Given the strength and location of the business and franchises we are acquiring, the board is confident to make this investment which will be earnings enhancing in its first full year of ownership.

“We would expect the acquisition to bring synergies and we also expect there to be opportunities to reduce working capital levels."

The takeover comes two years after Vertu Motors gained its first Mercedes-Benz franchises, when it bought Greenoaks for £22m.

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