Shares in Halfords (HFD) revved up 5% to 336.4p after the auto spares-to-bicycles retailer raised around £63.4 million to part fund the transformational, £62 million acquisition of tyre and automotive servicing business National.
Already the UK’s biggest vehicle service, maintenance and repair group, Halfords insisted the acquisition ‘will build on an existing position of strength’ and see the Redditch-based retailer exceed earlier garage estate and mobile van growth targets.
MOTORING SERVICES SHIFT
Significantly, the deal will help Halfords, a beneficiary of the pandemic-engendered cycling boom, to further shift its focus towards more economically-resilient motoring services.
Halfords has recently encountered a cycling headwind from supply chain disruption, although the retailer has flagged good availability of bikes heading into Christmas.
ALL ABOUT NATIONAL
Trading as National Tyres and Autocare, Viking Wholesale Tyres and Tyre Shopper, National is an established tyre seller and automotive servicing specialist that will slot into Halfords’ Autocentres business.
Graham Stapleton, Halfords’ CEO, said the acquisition ‘helps cement our position as the UK’s largest vehicle service, maintenance and repair business’.
He also insisted the deal will ‘see us deliver on our established strategy of evolving Halfords to become a motoring services focused business, with motoring revenue set to represent more than 70% of our pro-forma revenue following the acquisition’, up from 67% in the half to 1 October 2021.
DEFENSIVE BENT
National has a defensive bent to its business, having generated £3 million of EBITDA on sales of £157.7 million in the Covid-impacted year to December 2020.
Stapleton explained that National has a high quality, UK-wide network of garages and mobile tyre fitting vans, and 1,400 highly skilled colleagues, ‘providing a complementary fit with Halfords’ existing operations.
Post-acquisition, Halfords will have over 1,400 fixed or mobile motoring services locations, servicing a broad range of vehicles and delivering 7.5 million motoring jobs a year.’
This increased scale will bring the bulk of UK-mainland motorists within a 20-minute drive of a Halfords garage, ‘with even more vans available to provide mobile services at their home or work’.
CHARGED FOR GROWTH
Last month, Halfords’ shares clicked into gear after the company upgraded its full year outlook after a strong set of first half results. The company’s shares had wobbled since the summer as the pandemic-led cycling boom lost some momentum and the company was beset by supply chain issues.
In his results statement, Stapleton was keen to emphasise Halfords’ alignment to the growing electrification of transport, citing the retailer’s ‘market-leading position in the servicing and repair of electric vehicles’ as well as rapid growth in sales of e-bikes and e-scooters.
