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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