Yahoo Finance Halfords targeted for £1.4bn takeover
Van rental outfit Redde Northgate has made a £1.4bn merger approach for the high street bike and car repair chain Halfords.
It is understood that the pair have held detailed talks about a possible tie-up after Redde Northgate, which owns 130,000 vans and corporate cars in the UK and Spain, made a firm proposal to Halfords.
A City source said Redde Northgate had proposed a nil-premium merger, but the discussions were abandoned because of disagreements over price. The Halfords board is thought to have concluded that any such deal on the terms laid out would have undervalued the company.
However, it is believed that Redde Northgate could mount a fresh bid if the valuation gap between the two sides closes. It is understood that the Takeover Panel was informed of the discussions, which took place in the last few months.
A source close to the negotiations said: “There were discussions about what an integration of the two businesses might look like but there were questions over the valuations of both companies.
“Both share prices weren’t doing fantastically well at the time so there is nothing live at the moment. However, it could come back.”
Founded in 1892, Halfords is one of the most recognisable and biggest names on the high street. It has roughly 12,000 employees, nearly 400 stores, and close to 650 garages providing full repairs, MOT’s and other services. Its annual turnover was £1.6bn last year.
At current values, a nil-premium merger would value the combined company at close to £1.4bn.
With its shares trading at 365p, Redde Northgate has a market cap of £843m. Halford’s shares were changing hands at 234p on Friday, giving it a stock market value of £512m.
Halfords’ share price is up 8pc this year, but 20pc over the last month. Shares in Redde Northgate have fallen 12pc since the beginning of 2023, but have climbed 13pc in the last four weeks.
For the time being, Halfords has its sights set on much smaller targets. The retailer is among the bidders for Wiggle, the online bike chain that collapsed into administration last month.
Redde Northgate was created during the pandemic when van rental specialist Northgate joined forces with Redde, formerly known as Helphire, which sorts accident claims from businesses and company fleets. It went on to snap up the remnants of vehicle repair provider Nationwide Accident Services.
The company’s customers were historically the smaller end of the market but it has added some large corporate clients including Royal Mail, as well as several government departments and local authorities.
Chief executive Martin Ward has said that its customers prefer vehicle rental over ownership because it provides “flexibility over the cost of owning vehicles”.
In recent years, growth at Halfords has increasingly been driven by its network of car garages, which are more profitable than selling bikes. Sales now represent 40pc of total group turnover compared with just 14pc five years ago.
The company’s stated aim is to become “a motoring services-focused business”. It experienced a boom in cycle sales during lockdown but that soon fizzled out.
Halfords used to be owned by pharmacy giant Boots before it was sold to private equity firm CVC in 2002. It returned to the stock market in 2004.
Redde Northgate and Halfords both declined to comment.
