TIDMMMH
RNS Number : 2407X
Marshall Motor Holdings PLC
18 December 2019
MARSHALL MOTOR HOLDINGS PLC
("MMH" or the "Group")
Strategic Acquisition of Eight Volkswagen Group UK
Franchises
2019 Trading Update
Marshall Motor Holdings plc, one of the UK's leading automotive
retail groups, announces the acquisition ("Acquisition") of the
business and assets of a portfolio of Volkswagen and KODA passenger
and commercial vehicle franchises (the "Businesses") from Jardine
Motor Group UK Limited ("JMG") for up to GBP22.3m cash including
GBP13.0m of inventory. The Group also provides a brief trading
update on 2019.
Overview of Acquisition
The Businesses comprise six Volkswagen passenger car franchises
in Aylesbury, Harlow, Letchworth, Loughton, Milton Keynes and St
Albans together with a Volkswagen commercial vehicle franchise and
bodyshop in Loughton and a KODA passenger car franchise in Milton
Keynes.
Each of the acquired businesses operates from properties that
are fully compliant with the latest brand requirements. In
aggregate, approximately 400 employees will transfer to the Group
as part of the Acquisition.
JMG also operates a Volkswagen authorised repairer and Approved
Used car operation in Towcester which is excluded from the
transaction. JMG will be relinquishing this franchise as part of
the Acquisition.
The Volkswagen franchise in Aylesbury shares a site with an Audi
Approved Used business which is being retained by JMG. Completion
of Aylesbury Volkswagen will be deferred pending completion of the
legal process to sub-divide the site. It is expected that this
process and the transfer of the Aylesbury Volkswagen business will
be completed in 2020.
Aggregate revenue for these Businesses was GBP196.1m in the year
ended 31 December 2017 and GBP212.8m for the year ended 31 December
2018 with a loss before tax in these years of GBP3.3m and GBP2.8m
respectively. As a result, the Acquisition is expected to be
earnings dilutive in 2020 and 2021 whilst the Group improves the
operational performance of the Businesses. We expect the deal to be
earnings enhancing from 2022 onwards.
The total consideration agreed for the fixed assets and goodwill
of the Businesses will be up to GBP9.3m, including deferred
consideration in respect of the Aylesbury business, funded from the
Group's existing resources. The fixed assets include GBP4.3m in
respect of freehold/long leasehold properties in Letchworth and St
Albans and the goodwill is GBP3.6m. In addition, excluding
Aylesbury, the Businesses held GBP13.0m of inventory of motor
vehicles, parts and other stock at completion which will be
primarily funded via the Group's existing stock funding
facilities.
Strategic Rationale for the Acquisition
The Volkswagen Group is one of the world's leading automobile
manufacturers and the largest carmaker in Europe. MMH partners with
all of the Volkswagen Group's core brands: Volkswagen Passenger
Cars, Audi, SEAT, KODA and Volkswagen Commercial Vehicles. Year to
date Volkswagen Group's core passenger car brands accounted for
20.6% of all new vehicles sold in the UK and 11.5% for commercial
vehicles. Volkswagen Group is investing EUR60bn in e-mobility,
hybridisation and digitisation between 2020 and 2024, with the much
anticipated Volkswagen ID.3 model scheduled for release in the UK
in 2020.
MMH first partnered with Volkswagen in 2012 and has
significantly strengthened this partnership over the last seven
years. The Acquisition, completed with the full support of
Volkswagen Group UK, is in line with the Group's strategy to become
the UK's premier automotive group through growth with existing
brand partners in new geographic territories in the UK. Given the
changing motor retail landscape, that establishing further scale
with our brand partners is of paramount importance.
Following this acquisition, the Group now represents the
Volkswagen Group in 53 operations across the UK making the Group
Volkswagen Group UK's largest partner by number of locations. The
Group is now the second largest partner in the UK for Volkswagen
passenger cars with 14 retail centres[1]. The Group is also now the
largest partner in the UK for Volkswagen commercial vehicles with
six retail centres[2]. The acquisition of Milton Keynes KODA, which
follows the acquisition of six KODA franchises earlier this year,
further cements the Group's position as the largest KODA retailer
in the UK with 12 retail centres[3].
The acquired Businesses are located in excellent locations that
are contiguous with the Group's existing Volkswagen and KODA
businesses. They have excellent potential for growth and
improvement in operating performance as part of the Group's scaled
and focused Volkswagen and KODA divisions.
Alex Smith, Managing Director of Volkswagen Group UK, said:
"We are pleased to have extended our relationship with Marshall,
a trusted partner of Volkswagen Group here in the UK, demonstrated
by the fact that it is now our largest partner in the UK by number
of locations. Marshall has demonstrated its commercial and customer
focus capabilities over the long term and we are confident in its
ability to maximise the operating performances of these
businesses.
The Volkswagen Group is investing significantly in its future
product portfolio and having strong retail partners such as
Marshall is key to delivering these exciting new products to our
customers."
Other Portfolio Developments during 2019
In addition to the Acquisition, the Group has continued to
expand and develop its portfolio during 2019.
As announced on 4 March 2019, the Group acquired six KODA
franchises through two acquisitions, making it the largest KODA
retailer in the UK. We are pleased with the integration and
performance of these businesses.
In September 2019, the Group acquired two Honda businesses in
Reading and Newbury from JMG, reinforcing the Group's position as
the second largest Honda partner in the UK. The acquisitions were
completed with the full support of Honda UK and the Group now
represents the Honda brand in eight excellent locations in the
UK[4].
In 2019, the Group was awarded an open point for Volkswagen
Commercial Vehicles in Lincoln. The new business, which opened in
October 2019, occupies one of the Group's existing sites made
vacant following the relocation of the Group's Jaguar and Land
Rover businesses to a new 'Dual Arch' site in Lincoln earlier in
the year.
It is anticipated that the Honda acquisitions and Lincoln
Volkswagen Commercial Vehicles will contribute revenue of cGBP30m
in 2020 and will be marginally earnings dilutive in 2020. It will
be earnings enhancing thereafter.
As the largest Volvo dealership Group in the UK[5], we have
commenced a new partnership with LEVC, the manufacturer of electric
London taxis owned by Geely Automotive Holdings. The Group
represents the LEVC brand in Nottingham, sharing facilities with
the Group's Volvo franchise.
In addition, the Group is in advanced negotiations to acquire
the Volvo franchise in Derby. This is expected to complete before
the end of the year.
Daksh Gupta, Chief Executive of MMH, said:
"I am delighted that we have further strengthened our already
excellent relationship with Volkswagen Group UK with this
acquisition. While the acquired businesses are currently loss
making, we are confident in their future potential. The businesses
are in excellent locations that are contiguous to our existing
Volkswagen and KODA franchises and each site is fully compliant
with the latest brand requirements.
It is an exciting time to extend our partnership with Volkswagen
Group UK as the impact of its significant investment in
electrification and mobility services will be demonstrated. We are
extremely proud to represent Volkswagen Group and wish to thank the
UK management teams of each brand for their support for this
acquisition.
I am also delighted that we have been able to extend our
partnership with both the Honda and Volvo brands, each of which we
have long established and scaled relationships with. I am also
pleased to establish a new relationship with LEVC.
Finally, I would like to extend a warm welcome to all colleagues
of our recently acquired businesses to Marshall and look forward to
working with them over the coming years."
Trading Update
As has been well documented and previously reported, trading
conditions for the UK automotive retail market have been
challenging in 2019, impacted by continued weak consumer confidence
as a result of political uncertainty over Brexit together with
ongoing cost headwinds and vehicle supply constraints due to the
implementation of further emissions-related regulations in
September 2019. The Society of Motor Manufacturers and Traders'
('SMMT') currently forecasts the UK new car market to decline 2.8%
in 2019 and a decline of 4.4% in 2020 with the next forecast due to
be issued in January 2020.
The Group has performed well in this challenging market and
despite trading conditions weakening further in Q4 2019, the
Board's outlook for the full year remains unchanged.
The Board will provide an update on the trading environment on
10 March 2020 when it announces its results for the year ending 31
December 2019.
S
[1] Volkswagen Passenger Car Locations: Aylesbury, Barnstaple,
Grimsby, Harlow, Letchworth, Loughton, Milton Keynes, Newbury,
North Oxford, Reading, Scunthorpe, South Oxford, St Albans and
Taunton.
[2] Volkswagen Commercial Vehicles Locations: Bridgwater,
Lincoln, Loughton, Reading, Scunthorpe and South Oxford.
[3] KODA Locations: Barnstaple, Bedford, Croydon, Harlow,
Leicester, Letchworth, Milton Keynes, Newbury, Northampton,
Nottingham, Oxford and Reading.
[4] Honda Locations: Harrogate, Hull, South Leicester, Newbury,
Peterborough, Reading, Scarborough and York.
[5] Volvo Locations: Bishop's Stortford, Cambridge, Grantham,
Leeds, Milton Keynes, Nottingham, Peterborough and Welwyn Garden
City.
For further information and enquiries please contact:
Marshall Motor Holdings plc c/o Hudson Sandler Tel: +44 (0)
20 7796 4133
Daksh Gupta, Chief Executive Officer
Richard Blumberger, Chief Financial
Officer
Investec Bank plc (NOMAD & Broker) Tel: +44 (0) 20 7597 5970
Christopher Baird
David Flin
David Anderson
Hudson Sandler Tel: +44 (0) 20 7796 4133
Nick Lyon
Bertie Berger
Nick Moore
Notes to Editors
About Marshall Motor Holdings plc (www.mmhplc.com)
The Group's principal activities are the sale and repair of new
and used vehicles. The Group's businesses comprise a total of 119
franchises covering 24 brands, operating from 96 locations across
28 counties in England. In addition, the Group operates six trade
parts specialists, two used car centres, six standalone body shops
and one pre delivery inspection centre.
In May 2019 the Group was recognised by the Great Place to Work
Institute, being ranked the 11th best place to work in the UK
(super large company category). This was the ninth year in
succession that the Group has achieved Great Place to Work
status.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
ACQTRBJTMBBBTLL
(END) Dow Jones Newswires
December 18, 2019 02:00 ET (07:00 GMT)
Grafico Azioni Marshall Motor (LSE:MMH)
Storico
Da Mar 2024 a Apr 2024
Grafico Azioni Marshall Motor (LSE:MMH)
Storico
Da Apr 2023 a Apr 2024