Acquisitive car dealer Vertu Motors is seeking further deals after agreeing to buy the Co-operative Group’s Land Rover franchise for £31 million in cash.
The Gateshead-based firm, which trades as Macklin Motors in Scotland, also unveiled a jump in full-year profits and said the strength of the new car market has helped push like-for-like sales up 15 per cent since the start of its new financial year.
Vertu operates from 96 sites across the UK, having added 20 outlets – including Honda, Nissan and Vauxhall dealerships – during the year to 28 February. That expansion helped drive sales up 15.7 per cent to £1.3 billion, while adjusted pre-tax profits grew 12.3 per cent to £8.2m.
Recent figures showed new cars in Scotland rose almost 27 per cent in April and Vertu chief executive Robert Forrester said manufacturers, faced with weak demand across much of Europe, were tempting British buyers with attractive finance packages.
Forrester told The Scotsman that acquiring the Co-op’s Land Rover dealers in West Yorkshire, which trade as Farnell, was a “watershed” moment for the Aim-quoted company.
He said: “These businesses are exceptionally good performers. They make high returns, enjoy great customer satisfaction and have very strong management.
“This is our first move into such a premium marque and it’s something of a watershed. I would say today is the most important day in the group’s history since we acquired Bristol Street Motors in 2007.”
Co-op’s sale of the dealerships in Bradford, Guiseley and Leeds comes less than two weeks after credit rating agency Moody’s downgraded its banking arm’s debt to “junk” status and follows last month’s withdrawal from talks to buy more than 600 bank branches from Lloyds.
A Co-op spokesman said: “The Farnell motor brand is a strong and successful business but one where we do not have sufficient scale. We believe that the sale is the best way to secure a successful future for the business and its employees.”
The mutual has agreed to sell its fund management and life insurance businesses to Royal London for £219m and is also planning to offload its general insurance arm to strengthen its balance sheet.
The firm said it has received “a significant number of expressions of interest” for the division. Vertu’s acquisition of Farnell will be funded through a 38p-per-share placing, aimed at raising £50m before expenses, which it said has received good support from existing shareholders.
Forrester added: “We’ve also managed to bring in a number of very key institutions who have been very supportive. It would be unfair of me to name names but there’s a nice Scottish institution in there.”
He hinted that Scottish dealers could be on his radar as he seeks further opportunities, adding: “You can’t raise money in the City over and above an acquisition and then sit on the cash. We will try to increase the number of premium marques we represent, but we’ll be continuing our expansion in volume as well.”