Vertu Motors gearing up for further success

Jan 13 2010 by Peter McCusker, The Journal

RAPIDLY-growing motor dealers Vertu has made its first Scottish acquisition – with the Newcastle firm saying this gives it a base to develop north of the border.

The Dunfermline Autocentre is its latest acquisition for £2.6m with Vertu now operating almost 60 dealerships in the UK.

Since securing a £30m acquisition fund early last year it has made about a dozen purchases, leaving it with £10m for more opportunities.

Stock market-listed Vertu says the existing Scottish management have agreed to remain with the business.

Chief executive Robert Forrester said: “This is a very profitable and successful Ford dealership. This will give is a base from which to grow further in Scotland.”

The purchase reunites Forrester with some of the Reg Vardy team he had worked with before Vardy’s purchase by Pendragon in 2006.

He added: “We have a long-standing relationship with the management team who appreciate what Vertu is about. With a management team already in place in Scotland we have a base camp from which to grow.”

Vertu was formed by Forrester in 2006 and bought the Bristol Street Motors brand the following year. It is now the UK’s ninth-largest motor dealer with annual sales of almost £800m.

Broker Brewin Dolphin said: “We believe this is an attractive deal. The dealership is one of the largest Ford dealerships in Scotland in terms of turnover, it provides access to Scotland for Vertu’s internet, is a springboard for more deals in Scotland, carries some cheap debt and is earnings enhancing.”

The deal comes in at 5.4x EBITDA and will see Vertu pay around £1.5m in cash and £1.2m in shares for Boydslaw, which trades as the Dunfermline Autocentre.

Boydslaw achieved annual revenues of £32.5m in 2009 with pre-tax profits of £686,000. It has net assets of more than £1m comprising a £1.9m freehold, £0.9m of cash and £1.2m of debt.

The deal will have to be approved by Vertu shareholders at its annual general meeting on January 29 as Forrester owns 19.6% of shares in Boydslaw.

Forrester, a former managing director of North East-based Reg Vardy, added: “We have spent two-thirds of the £30m but this transaction is not costing a lot as some of it is being paid for with shares and the debt in the company is continuing.”

Vertu chairman Paul Williams said: "We are excited about the opportunities to scale the group that this acquisition represents.”