Halfords drives away with Nationwide Autocentres
CYCLES and car spares retailer Halfords today announced the £73m acquisition of the UK’s leading independent car servicing operation, Nationwide Autocentres, which has centres across Yorkshire.
Halfords said it wanted to build on its strong retail position in car maintenance by expanding into the £9bn car servicing and repairs market.
Nationwide Autocentres has operations across the region in locations including Bradford, Halifax, Keighley, Leeds and Sheffield.
In a statement to the London Stock Exchange today, Halfords, based in Redditch, said: “The transaction meets the group’s acquisition strategy and will further extend Halfords presence in the car maintenance market.
“Following the acquisition Nationwide will be re-branded as Halfords Autocentres and it is intended to roll-out a further 200 centres, creating over 1,000 new jobs.”
The £73.2m deal sees Halfords acquire Nationwide’s entire 224-branch network, creating the UK’s largest car parts, servicing and repairs operation.
The acquisition will also increase Halfords’ penetration into major fleet markets under Nationwide’s existing agreements.
The Nationwide management team will move to Halfords and it will play a key role in the expansion plan, which will be rolled out over the next few years.
“This doubling of scale provides a strong growth opportunity, requires low capital investment and generates working capital inflows. The expansion programme will be funded from the group’s net cash flow,” added the statement.
It is anticipated the deal will lead to further growth opportunities from cross-marketing of the group’s complementary customer base. Cost and purchasing synergies are also anticipated.
Nationwide’s EBITDA has grown by 70% over the past four years and in the year ended December 31 is expected to be £10.1m from revenues of £97.0m.
The re-branded Halfords Autocentre business is anticipated to double EBIT to around £20m in its third year of ownership and is expected to increase earnings per share by around 6% in its first full financial year within the group.
The acquisition, completed on a debt-free basis, has been funded from the group’s existing resources.
David Wild, chief executive of Halfords, said: “Our expansion into the adjacent car servicing and repair market is an exciting and logical move for Halfords.
“Car maintenance is a large and highly attractive sector where there is increasing demand from motorists for reliable service at affordable prices. Nationwide is a high quality business and represents an opportunity for significant growth.”
He said the group had seen strong growth in this market through the provision of expert advice and its “wefit” services.
“Customers trust the Halfords brand and we are sure that a national chain offering great service and MOTs at fair prices will be both popular and successful,” he added.
Halfords issued its third quarter interim management statement on January 14 and since then it said trading had been in line with internal forecasts and remained on track to deliver current year profit before tax, excluding the post acquisition results from Nationwide, in line with market expectations.
