LONDON, UK: Vertu Motors, a number one UK automotive retail Group, has agreed to purchase Helston Garages Group, a predominantly premium producer automotive retail group based inside the South West of England.
Vertu has acquired 28 franchised gross sales outlets, including significant scale and geographic protection to the Helston Garages Group’s existing footprint of 160 franchised outlets.
Total consideration of £117 million, net of money and money equivalents of £65 million, has been financed through a mixture of re-negotiated and new debt facilities.
The acquisition of Helston is a continuation of the long-term technique of the Group to drive scale, expand into new and attractive areas and introduce new Manufacturer Partners. Helston radically enhances the Group’s scale and attain into the South West of England. Following the acquisition, Vertu will have 32 gross sales outlets inside the region, up from the present four.
The Group has a longtime track record of integrating new companies and can leverage this experience to make sure systems and operational processes are built-in by the finish of March 2023.
The Integration Management Office will focus on systems, processes, coaching and procurement functions. The integration of those ought to drive synergies over time, with at least £3.2m annual revenue to be delivered by FY25 against 2019 base.
The Group will introduce its innovative Click2Drive digital platform, together with its award-winning websites, to the acquired dealerships and rebrand the acquired websites (except for Ferrari) utilizing the Vertu Motors and Bristol Street Motors brands.
Vertu has strong relationships with its Manufacturer partners, and the addition of Helston into the Group will additional strengthen relationships with key companions such as BMW, MINI, Stellantis and Jaguar Land Rover. Volvo and Ferrari will join the Manufacturers represented by the Group. The Group has received strong support from Manufacturer companions for the transaction.
The transaction is anticipated to have a restricted impact on the Group’s underlying revenue earlier than tax for monetary year to twenty-eight February 2023 (FY23) due to the timing of the transaction in relation to Vertu’s monetary year end. One-time deal associated prices of £2.5m are anticipated and can be included in non-underlying prices for FY23.
The first full year of contribution from the acquisition will be FY24 (to 28 February 2024), with anticipated double digit EPS accretion.
The Group expects one-off capex of £7m in FY24 to redevelop two key locations inside the Helston portfolio. Ongoing upkeep capex for the newly acquired dealerships is anticipated to be round £3m p.a. Post capex and incremental cost of debt, the acquisition is anticipated to ship positive FCF from FY25. The acquisition is anticipated to ship a return on funding forward of Group WACC and IRR above Group hurdle rates.
Helston Garages has been a household run enterprise for over 60 years, constructing up a community of high-quality dealerships throughout Dorset, Somerset, Devon and Cornwall, working under a number of manufacturers together with Westerly, Carrs and Truscotts. In the year ended 31 December 2021, the companies Vertu has acquired generated revenues of £498.9m, an underlying4 buying and selling pre-tax revenue of £17.9m and underlying EBITDA of £20.6m.
For the year ended 31 December 2019, the acquired assets delivered revenues of £522.5m, underlying buying and selling profits earlier than tax of £9.0m and an underlying EBITDA of £13.5m. Of the 28 gross sales outlets acquired, the bulk are with premium automotive Manufacturers: four Land Rover, 5 BMW, 1 BMW Motorrad, 5 MINI, three Jaguar, 5 Volvo, 1 Ferrari, and four Peugeot.
Robert Forrester, Chief Executive Officer of Vertu Motors, said: “We are delighted that Vertu Motors has agreed to purchase Helston and 28 dealerships, additional proof of the execution of our long-term technique to construct scale, geographic protection and deepen our relationships with our key automotive Manufacturers. We are particularly happy that we have received strong support for the acquisition from our Manufacturer Partners and our lending banks to support the deal. Volvo and Ferrari are launched to our portfolio, which is a really proud second for the Group.
Helston Garages has a lengthy track record of delivering strong profitability and we have admired the Group for a lengthy time. The acquisition will be each financially and strategically accretive for Vertu Motors, delivering lengthy run worth creation for our shareholders. We now have 32 dealerships inside the South West, which turns into a core region.
I am delighted to welcome so many new colleagues to the Group and look forward to integrating Helston and the team into Vertu Motors, particularly introducing our digital expertise.
While there is uncertainty inside the UK economy today, we proceed to invest for the long-term and stay enthusiastic about the future for Vertu Motors.”