Vertu Motors aquires two more sites

Jun 30 2010 by Iain Laing, The Journal

MOTOR dealer Vertu has further grown the geographic reach of its chain with the acquisition of two more sites.

The Newcastle company, which has grown in four years to be the eighth biggest UK motor dealer, has bought Vauxhall franchises from Baker Crewe, which went into administration this week.

It is paying £1.5m, of which £1.3m is for the freehold of the sites in Crewe and Macclesfield, and the rest on the assets. Vertu has also acquired the working capital of the dealerships, which amounts to £2m.

The purchases build further on the fast-growing company’s business in Cheshire which includes Ford and Vauxhall garages near Stoke and Crewe and complements its Vauxhall franchises in Chesterfield and Matlock. Vertu will now have nine Vauxhall dealerships.

In the year to December 31 the unaudited management accounts of the acquired businesses show a combined turnover of £14m. The acquisition will be funded with cash from existing resources and after allowing for the initial investment in advertising and marketing in the new dealerships, they are expected to be earnings enhancing in the year to February 2012.

Vertu said it believes there are significant opportunities to drive performance improvements and generate profit from its latest purchases as it integrates them into the business.

Chief executive Robert Forrester said: “We are delighted to have acquired these businesses in one of our developing geographical areas. Vertu will benefit from building a stronger regional concentration and there is considerable scope to integrate these dealerships onto Vertu’s scalable platform.

“This acquisition provides us with excellent opportunities to strengthen the group’s relationship with Vauxhall, one of our key manufacturer partners.”

Vertu said that, after allowing for investment in advertising and marketing in the new dealerships, they will be earnings enhancing in the year to February 2012.

It has already bought four Scottish dealerships this year, and now has 64 sales outlets, including 19 Ford outlets and 19 Mazda dealerships.

Vertu has been expanding fast since securing £30m for acquisitions from the City and now has more than 2,400 staff nationwide. It revealed last month that its pre-tax profits hurtled upwards from £70,000 to £4.6m in the 12 months ending February this year.

Analysts at its broker Brewin Dolphin in Newcastle expect sales to rise a further 7% to £876m this year and profits to increase to £7m by February 2011.