Shields sheds dealerships to Vertu

The west coast company is selling off its dual-franchised Ford and Mazda sites in Glasgow and Hamilton.

Vertu said the two dealerships would be re-launched under its Macklin Motors brand, which the firm created earlier this year as its Scottish moniker and already uses at its sites in Dunfermline and Paisley.

The company said that the new properties will be leasehold and will be purchased using cash from existing resources.

Vertu said the pair of dealerships generated sales of 27.1m in the year to 30 June, a sizeable chunk of Shields' total turnover of 57m for the same period.

Accounts filed at Companies House showed Shields' pre-tax losses widened from 523,000 in 2008 to 1.2m in 2009.

Robert Forrester, Vertu's chief executive, told The Scotsman: "The two businesses that we're buying are certainly in the right locations and certainly have the right franchises.

"We're already major partners with Ford and Mazda in the UK and we've got a lot of confidence that these are the rights franchises to be with. In the next two to four years, we expect these new businesses will flourish."

The acquisition brings the total number of Ford dealerships operated in the UK by the group to 19 and the total number of Mazda showrooms to four.

Joe O'Donnell, chairman and managing director of Shields, said: "This was a win-win deal for both companies. Few people know that we're both a motor dealer and also a property company and the property side of this deal was too good to miss.

"The sale will reinforce our balance sheet and will allow us to still benefit from leasing the sites to Vertu."

Last month, Vertu unveiled plans to buy ten showrooms north of the Border over the next three years. This comes after the company posted forecast-beating profits of 4.6m in the year to 28 February, compared with the 70,000 posted the year before. Revenue raced ahead from 761m to 819m after its number of sites rose from 44 to 60, helping to generate a takeover war chest of some 23m.

The group has since bought two other sites in addition to its latest Scottish purchases, taking the UK total to 64.

Vertu was launched as a cash shell in 2006 and bought Bristol Street Motors, at the time the UK's 13th-largest car dealer, in 2007. The group has grown to be the ninth-largest UK chain.

Kerry Billman, an analyst at Matrix, which carries a "buy" rating on Vertu, said: "The price paid is in line with previous transactions and we believe it represents a fair price. A continued stream of bolt-on acquisitions is expected."