Vertu shares price soars on news of buy back plan

Apr 12 2008 by Peter McCusker, The Journal

SHARES in North East car dealer Vertu Motors soared yesterday after its directors announced plans to buy back 10% of the company.

Vertu was listed on the Alternative Investment Market (Aim) in December 2006 raising £25m to fund acquisitions.

It is now the 10th largest motor group in the country and yesterday its directors revealed plans to acquire 10% of the company – saying they believed it was undervalued.

Shares in the business, which is led by chief executive Robert Forrester, soared during the day finishing 12% up at 33p.

A company spokesman said: “Vertu has today sent a circular to shareholders providing formal notice of a general meeting to propose a Special Resolution for the grant of authority to enable the company to purchase up to 10% of its own ordinary shares of 10p each in the market.

“The directors consider that the current share price of Vertu Motors plc undervalues the company. This presents an opportunity for the company to enhance its earnings per share through the purchase of its own shares.”

Vertu revealed last November that it planned to sell off surplus properties worth around £12m to reduce debt levels and fund further expansion.

But the spokesman said yesterday that a “small proportion” of the proceeds may now be used to help fund a share buy-back programme.

“This proposal does not change the company’s stated strategies of pursuing further acquisitions, in the form of franchised motor dealerships and used car only operations, together with the focused organic growth of its existing businesses,” he added.

Divisional director of stock broker Brewin Dolphin in Newcastle, Vinay Bedi, said: “This will enhance the value of the company for the existing shareholders.

“It’s a sign that the company has spare money and believes it is valued too cheaply. It’s a positive sign of the strength of the company.”

Vertu has 47 dealerships forming a national network operating under the Bristol Street Motors and Bristol Street Motor Nation brands.

Manufacturing partners include Citroen, Ford, Iveco, Honda, Peugeot, Renault, Vauxhall, Fiat Commercials and Hyundai.

Vertu’s executive directors are experienced within the sector, having previously held senior positions within Reg Vardy. The general meeting will take place at 10am on Friday May 9 at the Newcastle offices of Muckle LLP.