Vertu Motors has completed its long-awaited acquisition of 12 BMW, Mini and BMW Motorrad franchised motor retail outlets across five locations from Inchcape’s Cooper BMW division.
Confirmation of the deal’s completion comes more than eight weeks after the AM100 2020 PLC confirmed that it was in discussions over the acquisition of “a number of BMW dealerships” following speculation that Inchcape was set to sell a number of sites.
Inchcape chief executive, James Brearley, also told AM that the Cooper BMW disposals – which also includes the sale of BMW/MINI Croydon to Marsh Wall – were in the “latter stages” almost a month ago.
Vertu has completed the acquisition of 12 sales outlets at sites in York, Sunderland, Teesside, Durham and Malton.
These five locations each represent the BMW and MINI franchises, in addition to a BMW Motorrad motorcycle operation in Sunderland and a used car operation located in York, Vertu confirmed in a statement published via The London Stock Exchange.
Group chief executive, Robert Forrester, said: “We are delighted to announce the introduction of the much sought after BMW, Mini and Motorrad franchises to the group, previously a gap in our portfolio of manufacturer partners.
“The addition of these franchises has long been a strategic objective of the group.
“The acquisition achieves immediate scale in a region where the group is headquartered and already has strong representation.
“The business has previously performed at a high level and it is our intention to ensure that it returns to this previous success delivering both for customers and financially.
“As the Group enters its 15th year of trading, this acquisition reflects a further milestone in both its scale and maturity.”
Vertu now represents 32 franchises in the UK, more than any other UK automotive retailer.
Graeme Grieve, BMW Group UK and Ireland chief executive, said: “Vertu has been working with BMW Group over a number of years as a potential partner and we are delighted to be able to bring their professionalism and energy into our retailer network.
“We very much look forward to working closely with Vertu, to ensure customers in the North East and Yorkshire have an excellent customer experience with our brands and gain from the substantial investment we have made in electric powertrains as the UK accelerates its transition to zero carbon in new vehicles.”
Earnings neutral by 2023
Vertu’s new Durham, Teesside and Sunderland BMW Group dealerships have been acquired are freehold and long leasehold premises.
The remaining dealerships operate from leasehold premises, and new leases have been agreed on terms which secure the group’s future operational flexibility.
Vertu said that the businesses had been acquired for a total cash consideration of £18.7m (subject to finalising completion accounts) together with the assumption of manufacturer used vehicle stocking finance of £8.9m.
It added: “The assets acquired include £16m of freehold and long leasehold properties and a payment in respect of goodwill of £0.8m. The cash consideration has been funded with a combination of a new £12.76m 20-year mortgage facility from BMW Financial Services.”
For the year ended December 31, 2019, Vertu said that the acquired businesses had achieved revenues of £305m and a loss before tax of £6m, adding that “The group has a clear plan to drive performance improvements over a three-year period.”
The acquisition is expected to be at least earnings neutral by the year ending February 28, 2023, it said.
AM revealed that recruitment for Vertu’s soon-to-be formed BMW Group division had begun in mid-November and Vertu said in its statement that a new management team, with significant BMW and Mini franchise experience, had now been hired and would be integrated with existing, experienced Vertu operational management.
The group’s new dealerships will be rebranded under the Vertu premium car franchise banner.
In announcing its expansion with the BMW Group, Vertu Motors also delivered a trading update, stating that its trading performance – which reached record levels in September – had remained ahead of 2019 and original budget levels.
During the nine months ended November 30 Vertu said that it was trading approximately 15% above last year at an adjusted PBT level, despite the impact of COVID-19 ‘Lockdown 2’ in England.
The group said that it remains uncertain as to whether trading performance for the remainder of the financial year will continue at the same level, however, “given the potential impact on trading of further COVID-19 restrictions and the impact of Brexit from 1 January 2021”.