11:26 am, February 8, 2023
The private equity house behind Constellation Automotive Group – owners of WeBuyAnyCar.com and Cinch – has taken a stake in listed car dealer Vertu Motors.
TDR Capital has purchased a 3.1 per cent share of Vertu Motors in a deal announced this morning (Feb 8).
TDR Capital owns Constellation Automotive Group which in turn owns Marshall Motor Group – taken private last year after a £325m swoop on the listed business – as well as Cinch, WeBuyAnyCar.com and BCA.
TDR Capital also has a near-20 per cent stake in listed car dealer group Lookers after it purchased the shares from former director Tony Bramall in February last year.
That was seen as a blocking move by many in the industry to stop others taking Lookers private.
The 3.1 per cent share in Vertu could be seen as a similar tactic. The deal was worth £6.8m.
David Kendrick, partner at UHY Hacker Young, said: ‘This is a very interesting move from Constellation indeed.
‘They already have a significant stake in Lookers and could be making a similar move with Vertu.
‘As a minority holder as it stands with Vertu they don’t hold any control, however should this breach 20 per cent things change dramatically.
‘Is it a defensive move? A move for a future takeover plan? Or just a shrewd investment in a group massively undervalued?
‘I guess time will tell but another very interesting headline this morning.’
Experts recently told Car Dealer that the listed car dealer groups look incredibly good value for money after the rumoured £300m offer for Jardine.
Zeus Capital believes that if the Jardine deal goes ahead it highlights how ‘undervalued’ listed UK car dealer groups currently are.
The £300m Lithia Motors offer for Jardine – which runs 50 franchised dealerships across the UK and represents brands including Ferrari and Porsche – is based on its profit before tax of £24.5m in 2021.
Zeus Capital’s Mike Allen said: ‘Jardine’s FY21 underlying profit before tax of £24.5m was much lower than £84.4m for Pendragon, £80.7m for Vertu, and £90.7m for Lookers.
‘Therefore, for the relative level of historic profitability, the reported £300m valuation for Jardine makes the UK listed dealer groups’ current market capitalisations – Pendragon £274m, Vertu £199m, Lookers £329m – look materially undervalued.’
Experts in the industry have described the listed car dealers as ‘sitting ducks’ as their current market caps make them attractive targets for overseas investors, especially those in the States that are deal hungry.
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