8:48 am, November 9, 2023
Cinch and We Buy Any Car owner TDR Capital has increased its stake in listed car dealer group Vertu Motors.
The private equity house has upped its stake from 3.1% to 4.1%, snapping up a new tranche of shares yesterday.
Vertu announced the stake in a ‘notification of major holdings’ to the stock market this morning.
TDR first notified the market it had crossed the reporting threshold for its stake in February this year.
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.
David Kendrick, CEO of deal markers UHY Hacker Young, told Car Dealer: ‘This is very interesting, having invested in Lookers previously, could this be another shrewd investment to move towards a 20% stake to protect the potential of Vertu being bought out, or could this be to deliver themselves another strong investment return?
‘A 4.1% stake remains relatively small – but clearly with it growing again, sp something may be afoot.’
TDR, through its used car business Cinch, held a 20% stake in Lookers and blocked the first attempt by Canadian car dealer Alpha Auto Group to acquire the business.
It later backed an improved offer for Lookers and cashed in its shares as part of the deal.
Fellow listed car dealer group Pendragon has also recently agreed a deal to sell its dealerships and leasing business to American giants Lithia.
That deal, worth £397m, marks the third listed car dealer business to disappear from the London Stock Exchange in just over a year.
Many experts expect an offer will soon follow for Vertu Motors, one of the last listed car dealer businesses.
Vertu was the eighth most profitable group in the Car Dealer Top 100 and the seventh largest dealer in Europe.
This morning, shares were trading at 80.6p. Its shares have risen nearly 40% in the last six months and it currently has a market cap of £274.7m.
Analysts Zeus Capital believe Vertu is worth a lot more than that, telling investors today that it values the business at 108p per share.
In a note to investors, it said: ‘In our view, Vertu’s value has been highlighted by recent sector takeover activity.
‘Lookers was acquired at 9.3x FY23 P/E and Pendragon’s shareholders approved a deal to dispose of the UK motor retail and leasing businesses for £367m (c. 9.0x FY23 P/E). 9.0x FY24 P/E would value Vertu at 88.4p per share, but we think the group is worth more than this.’
Last week, Vertu announced the acquisition of Rowes Garages in the south-west of England in a £6.2m deal.
The acquisition saw Honda specialist Rowes’ four sales outlets in Plymouth, Plymstock and Truro transfer to Vertu.
Rowes’ Suzuki franchised outlet in Plymouth will be run as a used car outlet and Suzuki authorised repairer and will eventually be refranchised.
The deal follows Vertu’s acquisition of Helston Garages in the south-west in December 2022 and takes its number of outlets in the region to 34.
