Vertu Motors completes £9.2m Farmer & Carlisle Toyota acquisition

Vertu Motors has deployed some of its “M&A firepower” to complete the £9.2 million acquisition of two-site Toyota franchised car retailer Farmer & Carlisle.

The AM100 PLC’s acquisition of the business, which has dealerships in Leicester and Loughborough, has been “funded from the group's existing cash resources”, a statement issued via the London Stock Exchange said this morning.

Vertu's latest acquisition comes just days after it issued an updated profit before tax forecast of "no less than £70m" for its current financial year.

According to Vertu, Farmer & Carlisle achieved revenues of £29.2m and a statutory reported profit before tax of £0.6m in 2020, adding that the completed deal should be earnings enhancing for the year ending February 28, 2023.

Vertu Motors chief executive, Robert Forrester, said: “We are delighted to announce the group's expansion with the much sought-after Toyota franchise. 

“The addition of more Toyota sales outlets to the group's portfolio has long been a strategic objective of the group since we envisage the brand gaining market share in the medium-term and being well positioned to take advantage of opportunities as the wider automotive sector evolves.”

The Farmer & Carlisle Toyota acquisition was advised by UHY Hacker Young partner Ian McMohan and sees Vertu grow its footprint to 156 sales outlets across the UK.

It also increases the group's representation of Toyota to three locations and grows its footprint across the East Midlands to 39 sites representing 13 OEM partners.

Vertu’s statement said that the share capital of The Farmer & Carlisle Toyota was acquired for cash consideration of £9.2m (including £0.9m net cash acquired and subject to finalising completion accounts).

The acquisition includes two freehold dealership properties, which have been included in the purchase consideration at a value of £6m. Consideration includes a payment in respect of goodwill of £2.35m.

In its analysis of the impact of the deal, market analyst Zeus Capital stated: “Vertu trades on a P/E of 4.7x FY22 and 11.1x FY23.

“This is below the mid-cycle average of 12.1x we have discussed in prior notes and below the MMH FY2 takeover multiple. At 16.3x FY23 EPS, Vertu would be valued at 101p per share.

“This more than supports our prior intrinsic value estimate of 85.9p, which did not include the potential upside from deploying £90m of M&A firepower.”

Zeus added: “Having the strongest balance sheet in the sector, Vertu remains well positioned.”