North East van rental company Redde Northgate has declined to comment on reports of a potential merger with high street bike and car specialist Halfords.
The two companies are understood to have been in talks for several months over a £1.3bn merger, with Darlington based Redde Northgate said to have approached Halfords - the UK’s biggest retailer of motoring and cycling products and services.
It has been reported that the County Durham company – formed by the 2020 merger of light commercial vehicle hire business Northgate with support services company Redde – proposed a nil-premium merger, but the talks are understood to have been abandoned after board at Halfords believed the terms would have undervalued the company.
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It has now been reported that a fresh merger bid could be established, if the valuation gap between the two companies is narrowed. Going by current trading, a nil-premium merger would value the combined company at around £1.33bn. At the time of writing Redde Northgate’s shares were trading at 360p, giving it a market cap of £823.8m. Halford’s shares, meanwhile were trading at 230p, giving it a stock market value of £505.51m.
A source told The Telegraph: “There were discussions about what an integration of the two businesses might look like but there were questions over the valuations of both companies. Both share prices weren’t doing fantastically well at the time so there is nothing live at the moment. However, it could come back.”
Redditch based Halfords has now been trading since 1892 and has more than 10,000 employees based in its 750 retail stores and autocentres. The company prides itself on the fact that 90% of the UK population is never more than 20 minutes from a shop or autocentre run by the bike and car repair chain. Alongside its 400-plus shops and 300 autocentres Halfords operates logistics and distribution centres in Coventry and Redditch, with a 350-strong team.
Redde Northgate meanwhile now has a fleet of more than 130,000 vehicles across the UK, Ireland and Spain and saw strong growth in its most recent full year results. The company reported a near 20% rise in revenue to the end of April, to £1.49bn, as well as a 9.7% rise in pre-tax profits to £178.1m. Its most recent acquisitions – traffic management vehicle supplier Blakedale and chilled and frozen delivery van rental specialist FridgeXpress – were also said to have delivered growth.
