Vertu Motors PLC (LON:VTU) said it has increased its BMW and MINI presence by acquiring 12 loss-making sales outlets in England from Inchcape plc (LON:INCH).
The dealerships, located in York, Sunderland, Teesside, Durham and Malton, cost £18.7mln in cash together with the assumption of manufacturer used vehicle stocking finance of £8.9mln.
READ: Vertu Motors back in profit as used cars fly off the lot as coronavirus lockdown ends
In the year to December 31, the businesses generated revenues of £305mln and a loss before tax of £6mln.
Vertu said it expects to see a return on its investment from the financial year 2024.
The assets include £16mln of freehold and long leasehold properties and a payment in respect of goodwill of £800,000, the car retailer said.
The cash consideration was funded with a combination of a new £12mln 20-year mortgage facility from BMW Financial Services, secured on the acquired freehold and long leasehold dealership properties at a fixed interest rate of 2.9% for the first five years, and some of the group's existing cash resources.
In the same update, the AIM-listed car dealer announced its trading performance has remained ahead of the prior year and original budget levels, with adjusted profit before tax for the nine months to November 30 up 15% compared to 2019.
“Vertu has made an excellent acquisition, partnering with BMW for the first time. We think the deal has been struck on favourable terms,” analysts at Liberum commented.
“The assets are currently loss-making, but we back Vertu management to turn the business around.”
Shares in both Vertu and Inchcape dipped 1% to 27.8p and 625.5p respectively on Monday morning.