Vertu Motors Expands with the Acquisition of Burrows

LONDON - Vertu Motors, one of the UK's leading automotive retailers, has announced the acquisition of Burrows Motor Company Limited in a move to expand its dealership network and strengthen partnerships with major car manufacturers. The transaction, which took place on Tuesday, marks a strategic step in the group's expansion.

The family-owned Burrows dealer group adds five Toyota dealerships, two Mazda dealerships, and one Kia dealership to Vertu Motors, significantly enhancing the company's presence in Yorkshire and Nottinghamshire. This acquisition aligns with Vertu's brand strategy, and the newly acquired dealerships are scheduled to be rebranded and integrated into Vertu's system platform in the coming weeks.

According to the financial details of the deal, the purchase price is approximately £12.5 million excluding cash, with an additional £1.0 million deferred payment over 12 months. The acquisition includes properties valued at £17.6 million and goodwill valued at £4.0 million. Vertu will finance the purchase with existing cash and borrowing capacity, keeping the debt-to-equity ratio well below its target level. The group has also assumed Burrows’ debts, which include approximately £10.5 million in mortgage financing for properties and used vehicle stock loans.

For the financial year ending December 31, 2023, Burrows reported revenues of £168.9 million and an operating profit of £1.4 million. Despite forecasting a loss for the remaining four months of the financial year due to the cyclical nature of vehicle sales, the acquisition is expected to be earnings-enhancing in Vertu's first full year of ownership.

Vertu Motors CEO Robert Forrester expressed his excitement for the acquisition, emphasizing the strategic benefits, such as enhanced scale with key manufacturers and improved brand presence in targeted regions. The company’s growth strategy through acquisitions is driven by return on investment metrics and a commitment to creating shareholder value.

This expansion is part of Vertu Motors’ strategy to grow its scale, aligning with the group's investment threshold metrics and capital allocation policy. The information provided is based on a press release statement.