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Halfords makes GBP63.4m acquisition of Axle Group Holdings

Halfords is to use the proceeds of a GBP63.4 million share placing representing 9.9 per cent of previously issued share capital, to acquire tyre and automotive servicing business, Axle Group Holdings. Efficiencies from the deal are expected to add GBP18 million to Halfords cash profits by year five, with a third of that coming in year one.

The group believes the acquisition is “both strategically and financially compelling, delivering on Halfords’ objective of evolving into a business more heavily weighted towards Motoring Services.”

Halfords shares rose 5.5 per cent following the announcement.

Matt Britzman, Equity Analyst at Hargreaves Lansdown, says: “The purchase of Axle Group Holdings (National), for GBP63.4 milliion, continues the group’s trend of acquisitions in recent years. Halfords’ more recent acquisitions have been successful, so the market’s optimism will have something to do with expectations of a repeat performance. While the efficiencies should add to group profit pretty quickly, the bigger story is that the move helps accelerate Halfords’ plan to weight operations toward motoring services.

“Given the majority was issued via a placing, it’s not only a large deal, but also dilutive for most retail investors. That said, the group performed very well during the pandemic and using that momentum to push toward their long term goals is a positive step.”

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