4 September 2020
THIS ANNOUNCEMENT CONTAINS INSIDE
INFORMATION
REDDE NORTHGATE PLC
(“Redde Northgate” or the “Group”)
Acquisition of
certain businesses and certain assets of Nationwide Accident Repair
Services
Significantly
increasing our strategic and operational capability
Redde Northgate plc (LSE:REDD), the integrated mobility
solutions and automotive services provider, today announces the
acquisition, by a wholly owned subsidiary, of certain businesses
and certain assets of Nationwide Accident Repair Services
(“Nationwide”) 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.
The Group also provides a brief update on trading ahead of the
preliminary announcement scheduled for 16
September 2020.
Trading
Since our pre-close trading update of 19
May 2020, and as restrictions relating to Covid-19 have
eased, the Group has seen sequential monthly improvements in
trading, such that the level of support packages provided to
customers has now reduced to a minimal level, vehicles on hire have
increased in all countries, accident and incident volumes have
started to increase as traffic volumes pick up, and vehicle
disposal channels have re-opened, with recent significant
improvement in residual values compared to the prior year.
Further, excellent progress has continued to be made in integrating
Redde and Northgate since the merger.
Given the improving trading environment and the continued close
management of liquidity, cash inflows have been strong and the
headroom on our bank facilities has increased from £234m at the end
of April 2020 to £291m at the end of
August 2020.
Acquisition
Nationwide is the UK’s largest wholly owned repair network and
the largest independent accident repair company in Europe. It
is a strategic partner to many UK insurers, with whom, in several
cases, Redde Northgate has existing relationships. Of the
current 102 bodyshop sites, we 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 we will make a determination in due course
whether to take leases on these sites based on whether we achieve
satisfactory lease terms. The acquisition will see
approximately £17m[1] 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.
We welcome those Nationwide colleagues who will be joining the
Redde Northgate Group and we look forward to creating new value and
service offerings for all our stakeholders.”
For further information contact:
Buchanan
David Rydell/Jamie Hooper/Tilly
Abraham
+44 (0) 207 466 5000
Notes to Editors:
Redde Northgate plc is a leading integrated mobility solutions
platform formed in February 2020
following the all-share Merger of light commercial hire business
Northgate plc and Redde plc, the provider of incident and accident
management, legal and other mobility-related services.
The Group provides mobility solutions and automotive services to
a wide range of businesses and customers spanning the vehicle life
cycle across vehicle supply, service, maintenance, repair,
recovery, accident and incident management and disposal through
sale or salvage.
With an extensive network and diversified fleet of over 110,000
owned vehicles and over 400,000 managed vehicles in more than 100
branches across the UK, Ireland
and Spain, the Group aims to
utilise its scale, reach and comprehensive suite of integrated
services to offer a market-leading customer proposition and drive
enhanced returns for shareholders.
Further information regarding Redde Northgate plc can be found
on the Company’s website:
www.reddenorthgate.co.uk
[1] Gross assets consist of properties, plant, machinery and
stock. Value is an estimate and unaudited at this stage.