Halfords in £73m deal to enter car servicing

London: British car parts-to-bicycles retailer Halfords is buying Nationwide Autocentres for £73.2 million (Dh423 million) in cash to become the biggest player in the country's car servicing and repair market.

Halfords shares leapt as much as 10 per cent to a five-week high of 432.9 pence yesterday, as analysts welcomed a deal which they said could add a powerful source of growth in the coming years.

"We believe this is a very good deal for Halfords and offers the group an additional entry point into the structurally attractive car maintenance market," said Singer's Matthew McEachran.

Reuters

Halfords said the deal would allow it to benefit from a trend towards older cars on Britain's roads and that once it had integrated Nationwide's 224 outlets it would roll-out a further 200 centres in the coming years, creating over 1,000 jobs.

"The total number of cars on the UK roads is going up despite the fact that new car registrations are down," said Halfords chief executive David Wild on a call with journalists. "That just makes a £9 billion market even more attractive because clearly older cars do need more servicing."

Shore Capital analyst Kate Calvert said Halfords was paying a "reasonable price" for a growth business.

Halfords said the rebranded Halfords Autocentre business was expected to double earnings before interest and tax to about £20 million in its third year of ownership. The deal would also boost earnings per share by about 6 per cent in its first full year of ownership, it said.