Redde Northgate plc, the integrated mobility solutions and automotive services provider, has acquired, by a wholly owned subsidiary, certain businesses and certain assets of Nationwide Accident Repair Services by way of a purchase from administrators, for an initial cash consideration of up to £11m, plus a deferred consideration of up to £5m conditional on retention of certain trade business on satisfactory terms.
Of the current 102 bodyshop sites, Redde Northgate will take up to 77 sites, providing the Group with national geographic coverage. Of these sites, there are a small number of freehold properties, and the remaining leasehold properties will be occupied under licence granted by the administrators and Redde Northgate will make a determination in due course whether to take leases on these sites based on whether it achieves satisfactory lease terms.
The acquisition will see approximately £17m of gross assets, including a fleet of mobile repair vans to service customers in their location, as well as approximately 2,300 of Nationwide staff, transfer to the purchasing subsidiary.
The acquisition is expected to be earnings enhancing in the first full year of ownership as well as delivering a post-tax return on invested capital comfortably in excess of the Group’s weighted average cost of capital.
The acquisition, which will be funded from existing facilities, further reinforces the strength of Redde Northgate’s proposition, extending the Group’s existing capabilities in Service, Maintenance and Repair services.
Before this transaction, in the UK, Redde Northgate did not have in-house capability for repairs, but has long considered building capability in the UK as the Group already successfully runs repair centres in Spain. This transaction offers the Group the opportunity to deliver on that goal quickly, with a strong team, well located sites and an existing flow of business, utilising surplus repair capacity with its own volumes.
Commenting on the acquisition, Martin Ward, CEO of Redde Northgate, said
“At the time of the Redde Northgate merger, we set out our vision to become the leading integrated mobility solutions provider. This acquisition, our first post-merger, is in line with that vision and significantly increases our strategic and operational capability to support a wider number of business partners requiring automotive repairs. We expect this acquisition will open up new markets to the Group, and in combination with an established pipeline of repair work from existing Group companies, such as FMG, it is well placed to maximise future opportunities.”
