Vertu Motors

Vertu, which joined AIM in December with an oversubscribed funding at 60p to play a part in the consolidation of the motor retail sector, has motored in with its second acquisition.

Led by chief executive Robert Forrester, managing director of Reg Vardy before its sale to sector behemoth Pendragon in February 2006, Vertu is buying Blakes for £4.9m in a predominantly cash-based deal. Blakes’ operations include a Vauxhall dealership in Chesterfield and a Vauxhall service centre in Matlock, as well as Peugeot dealerships in Chesterfield and Worksop. These businesses will be re-branded as Bristol Street Motors, in line with Vertu’s first ‘platform’ acquisition, and Forrester sees a strong strategic and geographic fit with the group’s existing operations and brand, and will look to drive growth synergies and margin enhancement from the acquisition.

For the year to December, Blakes scored a small £40,000 pre-tax profit from £59.7m sales, and the deal looks keenly priced, with Blakes’ net asset value estimated at £4.4m following the revaluation of three freehold properties.

Earlier this year, Vertu acquired Bristol Street Motors in a £40m cash and shares transaction (facilitated with the aid of a £26.2m placing) providing the platform for expansion. The profitable Bristol Street sells both new and used cars and also offers commercial vehicle sales and after-sales services – marques offered range from Ford, to Peugeot and Hyundai.

Early days for Vertu on AIM, but with proven management and institutions such as F&C Asset Management and UBS on board, the shares should not be ignored. Speculative buy.