Halfords – Motoring On With £63.4M Acquisition Of Axle Group Holdings

Halfords – Motoring On With £63.4M Acquisition Of Axle Group Holdings
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Halfords Group plc (LON:HFD) have raised around £63.4m, with most of the proceeds from issuing new shares through a placing. The new shares total 9.9% of the previous issued share capital.

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The proceeds will be used to fund the acquisition of the tyre and automotive servicing business, Axle Group Holdings. Efficiencies from the deal are expected to add £18m to Halfords cash profits by year 5, with a third of that coming in year 1.

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.”

The shares rose 5.5% following the announcement.

Halfords's Acquisition Of Axle Group Holdings

Matt Britzman, Equity Analyst at Hargreaves Lansdown:

“The purchase of Axle Group Holdings (National), for £63.4m, continues the groups 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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Jacob Wolinsky is the founder of ValueWalk.com, a popular value investing and hedge fund focused investment website. Jacob worked as an equity analyst first at a micro-cap focused private equity firm, followed by a stint at a smid cap focused research shop. Jacob lives with his wife and four kids in Passaic NJ. - Email: jacob(at)valuewalk.com - Twitter username: JacobWolinsky - Full Disclosure: I do not purchase any equities anymore to avoid even the appearance of a conflict of interest and because at times I may receive grey areas of insider information. I have a few existing holdings from years ago, but I have sold off most of the equities and now only purchase mutual funds and some ETFs. I also own a few grams of Gold and Silver
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