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RNS Number : 9161F
Marshall Motor Holdings PLC
17 November 2015
17 November 2015
MARSHALL MOTOR HOLDINGS PLC
("MMH" or the "Group")
Acquisition of S.G. Smith
Marshall Motor Holdings plc, one of the UK's leading automotive
retail and leasing groups, is pleased to announce the acquisition
of SG Smith Holdings Limited ("SGS") for a cash consideration of
approximately GBP24.4m (the "Acquisition"). The acquisition
agreement provides for a retention of GBP1.7m, the release of which
is subject to certain performance conditions, the completion of
certain property developments and finalisation of the completion
accounts.
SGS, which has been family owned and operated since it was
founded in the 1930s, is a new and used car dealer group operating
from locations across Kent, Surrey and London. SGS brand partners
are Audi in the Wimbledon, Coulsdon, Bexley and Beckenham market
areas; Skoda in Croydon; and Mercedes Benz commercial (after sales
only) in Croydon.
The Acquisition is in line with MMH's growth strategy and
enables the Group to grow with its existing brand partners,
including a major expansion of the Group's relationship with Audi;
Audi's future growth prospects are expected to benefit from an
exciting new product pipeline over the coming years. The
Acquisition also extends the Group's footprint into new and
attractive geographic territories, being the Kent, Surrey and
London markets.
The Acquisition has been funded from the existing cash resources
of the Group. The Acquisition is expected to be materially earnings
enhancing for the year ending 31 December 2016 and to generate a
return on investment in excess of the Group's cost of capital* in
the following year. Given the timing of the Acquisition after the
important September plate change period, the Acquisition is
expected to be marginally dilutive for the financial year ending 31
December 2015. In addition, the Group has incurred transaction fees
and expenses in connection with the Acquisition of approximately
GBP0.5m.
The Group has acquired the entire issued share capital of SGS
from Robert Smith (the son of the founder and SGS Managing
Director) and certain other family and non-family individual
investors. Robert Smith will remain with the Group for some months
to assist with the integration process.
Daksh Gupta, Group Chief Executive, commented:
"We are delighted to have acquired this long established, family
run business and I am particularly pleased to welcome our new
colleagues to the Group. The Acquisition is in line with our stated
strategy to grow scale with existing brand partners and expand our
geographic footprint. The business is a good cultural fit for the
Group and we are delighted to be significantly growing our
relationship with Audi, strengthening our Skoda representation and
extending our partnership with Mercedes Benz in commercial
vehicles."
Robert Smith, SGS Managing Director, commented:
"After over 70 years, it was important to our family to find a
good home for our business and our people. The Acquisition brings
together two long standing organisations with a rich history in
automotive retail. I would like to thank the entire SGS team and
wish them well with Marshall Motors over the coming years."
For further information and enquiries please contact:
Marshall Motor Holdings c/o Hudson Sandler Tel:
plc +44 (0) 20 7796 4133
Daksh Gupta, Group Chief
Executive
Mark Raban, CFO
Investec Bank plc (NOMAD Tel: +44 (0) 20 7597 4000
& Broker)
Christopher Baird
David Flin
David Anderson
Hudson Sandler Tel: +44 (0) 20 7796 4133
Nick Lyon
Alex Brennan
Notes to Editors
1. About Marshall Motor Holdings plc (www.mmhplc.com)
The Group's principal activities are the sale and repair of new
and used vehicles through Marshall Motors and the leasing of
vehicles through Marshall Leasing. The Group's businesses are
integrated and prior to the Acquisition, included a total of 71
franchises covering 24 brands, operating from 63 sites across 16
counties in England.
MMH is the only franchised dealer group in the UK to represent
all of the top 5 premium vehicle manufacturer brands (being Audi,
BMW, Mercedes-Benz, Land Rover and Jaguar) and all of the top 10
volume vehicle manufacturer brands (being Ford, Vauxhall,
Volkswagen, Nissan, Peugeot, Toyota, Citroen, Hyundai, Kia and
Skoda). Its diverse portfolio means it represents manufacturer
brands accounting for around 88% of all new vehicle sales in the
UK, the highest market coverage of any UK dealer group.
With revenues of GBP1.1bn in 2014, the Group is the tenth
largest dealer group in the UK.
In May 2015 the Group was recognised by the Great Place to Work
Institute, being ranked the 26(th) best place to work in the UK (in
the large company category).
2. About SG Smith
The statutory audited consolidated accounts for S G Smith
Automotive Limited (a wholly owned subsidiary of SGS) for the year
ended 31 December 2014 reported revenue of GBP177.4m, profit before
tax of GBP3.0m and total net assets of GBP12.2m. Unaudited
management accounts covering the 9 month period to 30 September
2015 show profit before tax of cGBP2.9m. Prior to the Acquisition,
certain trading and investment freehold properties were transferred
out of SGS to a company controlled by the Sellers and will not be
acquired as part of the Acquisition. SGS has, therefore, entered
into leasehold arrangements for the continued occupation of two of
the transferred properties at an annual rent expense of
approximately GBP0.28m.
The Acquisition consideration includes cGBP9.3m in respect of
the estimated consolidated net assets of SGS, subject to a
completion accounts process, which included cGBP4.1m of freehold
property and cGBP1.4m of net cash.
*The 'return on investment' is a simplified calculation
comprising net operating profit after tax divided by invested
capital. We consider this a useful criteria to assess acquisitions,
though alternative calculations could also be applied.
Cautionary statement
This announcement contains unaudited information based on
management accounts or forward-looking statements that are based on
current expectations or beliefs, as well as assumptions about
future events. These forward-looking statements can be identified
by the fact that they do not relate only to historical or current
facts and undue reliance should not be placed on any such
statements because they speak only as at the date of this
announcement and are subject to known and unknown risks and
uncertainties and can be affected by other factors that could cause
actual results, and MMH's plans and objectives, to differ
materially from those expressed or implied in the forward-looking
statements. MMH undertakes no obligation to revise or update any
forward-looking statement contained within this announcement,
regardless of whether those statements are affected as a result of
new information, future events or otherwise, save as required by
law and regulations. Nothing in this announcement should be
construed as a profit forecast
This information is provided by RNS
The company news service from the London Stock Exchange
END
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