Vertu Motors has completed the acquisition of online commercial vehicles retailer Vans Direct for a total consideration of £7.5 million.
The AM100 group announced the deal via the London Stock Exchange this morning, with chief executive Robert Forrester describing the business as being “synergistic and parallel to” its existing core motor retail business.
Vertu said that it expected Newport-based Vans Direct to be immediately earnings enhancing, adding that it would bring significant know-how and accelerate the group’s presence in multi-channel retailing through its high ranking website domain.
Forrester said: “This is an exciting development in a growing space, which is synergistic and parallel to our core motor retail business and which strengthens our multi-channel offering.
“We expect Vans Direct to generate an earnings stream with higher gross and net margins than those typically earned by the group, and we believe that the future growth prospects for this new business are significant.
“By working with the complementary skills of the Vans Direct team and the group’s existing operations, we believe that we can build a significant business which will meet the needs of a wider range of customers.”
The Vans Direct business has been the winner of the ‘Best Van Leasing Broker’ award from the Leasing Broker Federation for the last three years (2016, 2017 and 2018).
Founded in 1999, Vertu said that the business had flourished following the appointments of Jane Pocock as managing director and Richard Simmonds as operations director, of the business in 2009.
Simmonds will be joining Vertu along with their team of 42 colleagues and Jane Pocock will remain a non-executive director of Vans Direct following the acquisition.
The group said that the acquisition had been made for a total consideration estimated at £7.5m, including an estimated amount in respect of an earn-out arrangement rewarding an on target performance over a two year period.
The terms of this earn out may result in additional consideration, up to an amount of £2m, being paid in the event that future profit targets are exceeded, it added.
This consideration includes an initial payment for goodwill of £6m together with estimated net assets of £1m (including cash of £0.6m).
The initial payment of £7.0m has been settled in cash from Vertu’s existing resources.
For the year ended 31 October 2017, Vans Direct reported revenues of £34.6m, a gross margin of 11.7% and EBITDA of £1.2m.
Vertu Motors last set of annual results, published in May last year, reported reductions of 0.9% in turnover and 9.2% in profits in the group’s annual results.
At the time, Forrester told AM that there was no pressure for the group to grow through acquisitions, adding that it was “on the front foot” to make acquisition during 2018 as the market begins to present opportunities offering greater value.
“I didn’t talk acquisitions up this time last year because the market was in a very different position,” he said.
In July, Vertu followed this statement of intent with the acquisition of Hughes Group and its subsidiary Hughes of Beaconsfield for £21.8 million.
The deal, Vertu’s first in over two years, included six sites and takes the company's dealership portfolio to 125 across the UK.