Redde Northgate Plc Acquisition of business and assets
4 September 2020
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION
REDDE NORTHGATE PLC
("Redde Northgate" or the "Group")
Acquisition of certain businesses and certain assets of Nationwide Accident
Significantly increasing our strategic and operational capability
Redde Northgate plc (LSE:REDD), the integrated mobility solutions and
automotive services provider, today announces the acquisition, by a wholly
owned subsidiary, of certain businesses and certain assets of Nationwide
Accident Repair Services ("Nationwide") by way of a purchase from
administrators, for an initial cash consideration of up to GBP11m, plus a
deferred consideration of up to GBP5m conditional on retention of certain trade
business on satisfactory terms.
The Group also provides a brief update on trading ahead of the preliminary
announcement scheduled for 16 September 2020.
Since our pre-close trading update of 19 May 2020, and as restrictions relating
to Covid-19 have eased, the Group has seen sequential monthly improvements in
trading, such that the level of support packages provided to customers has now
reduced to a minimal level, vehicles on hire have increased in all countries,
accident and incident volumes have started to increase as traffic volumes pick
up, and vehicle disposal channels have re-opened, with recent significant
improvement in residual values compared to the prior year. Further, excellent
progress has continued to be made in integrating Redde and Northgate since the
Given the improving trading environment and the continued close management of
liquidity, cash inflows have been strong and the headroom on our bank
facilities has increased from GBP234m at the end of April 2020 to GBP291m at the
end of August 2020.
Nationwide is the UK's largest wholly owned repair network and the largest
independent accident repair company in Europe. It is a strategic partner to
many UK insurers, with whom, in several cases, Redde Northgate has existing
relationships. Of the current 102 bodyshop sites, we will take up to 77 sites,
providing the Group with national geographic coverage. Of these sites, there
are a small number of freehold properties, and the remaining leasehold
properties will be occupied under licence granted by the administrators and we
will make a determination in due course whether to take leases on these sites
based on whether we achieve satisfactory lease terms. The acquisition will see
approximately GBP17m of gross assets, including a fleet of mobile repair vans
to service customers in their location, as well as approximately 2,300 of
Nationwide staff, transfer to the purchasing subsidiary.
The acquisition is expected to be earnings enhancing in the first full year of
ownership as well as delivering a post-tax return on invested capital
comfortably in excess of the Group's weighted average cost of capital.
The acquisition, which will be funded from existing facilities, further
reinforces the strength of Redde Northgate's proposition, extending the Group's
existing capabilities in Service, Maintenance and Repair services. Before this
transaction, in the UK, Redde Northgate did not have in-house capability for
repairs, but has long considered building capability in the UK as the Group
already successfully runs repair centres in Spain. This transaction offers the
Group the opportunity to deliver on that goal quickly, with a strong team, well
located sites and an existing flow of business, utilising surplus repair
capacity with its own volumes.
Commenting on the acquisition, Martin Ward, CEO of Redde Northgate, said
"At the time of the Redde Northgate merger, we set out our vision to become the
leading integrated mobility solutions provider. This acquisition, our first
post-merger, is in line with that vision and significantly increases our
strategic and operational capability to support a wider number of business
partners requiring automotive repairs. We expect this acquisition will open up
new markets to the Group, and in combination with an established pipeline of
repair work from existing Group companies, such as FMG, it is well placed to
maximise future opportunities.
We welcome those Nationwide colleagues who will be joining the Redde Northgate
Group and we look forward to creating new value and service offerings for all
For further information contact:
David Rydell/Jamie Hooper/Tilly Abraham +44 (0) 207 466
Notes to Editors:
Redde Northgate plc is a leading integrated mobility solutions platform formed
in February 2020 following the all-share Merger of light commercial hire
business Northgate plc and Redde plc, the provider of incident and accident
management, legal and other mobility-related services.
The Group provides mobility solutions and automotive services to a wide range
of businesses and customers spanning the vehicle life cycle across vehicle
supply, service, maintenance, repair, recovery, accident and incident
management and disposal through sale or salvage.
With an extensive network and diversified fleet of over 110,000 owned vehicles
and over 400,000 managed vehicles in more than 100 branches across the UK,
Ireland and Spain, the Group aims to utilise its scale, reach and comprehensive
suite of integrated services to offer a market-leading customer proposition and
drive enhanced returns for shareholders.
Further information regarding Redde Northgate plc can be found on the Company's
 Gross assets consist of properties, plant, machinery and stock. Value is an
estimate and unaudited at this stage.
(END) Dow Jones Newswires
September 04, 2020 02:00 ET (06:00 GMT)
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