Private equity group TDR Capital has agreed to buy WeBuyAnyCar.com owner BCA Marketplace in a deal that values the company at £1.9bn.
The confirmation of the deal will come as a boost to Neil Woodford’s flagship fund, which froze £3.7bn of investor money this month amid liquidity concerns and is a big shareholder in BCA. Woodford Investment Management is one of the 44 per cent of shareholders to support the offer, TDR said.
The companies said on Wednesday that the cash offer of 243p a share was in line with the value they disclosed last week when they confirmed talks were at an advanced stage. BCA shares traded at 235p at the close of trading on Tuesday.
The offer values BCA’s share capital at £1.9m, a premium of approximately 25 per cent to the value of the shares before the buyout offer was announced.
Analysts at N+1 Singer described TDR’s bid as “hardly a knockout offer”, noting it was still 13 per cent below its target price of 275p.
The agreement comes as the British car industry faces deep uncertainty, with Brexit posing a threat to its just-in-time supply chains that rely heavily on frictionless trade with the EU. The industry’s trade body this week warned a no-deal Brexit would deliver a “knockout blow” to the competitiveness of Britain’s automotive sector.
BCA reported revenues of £3bn in the year to March 2019, up from £2.4bn a year earlier. It also made operating profit of £100m, up from £88m the previous year, in its preliminary results on Wednesday.
Avril Palmer-Baunack, chief executive of BCA who likes to describe the business as the “Amazon of cars”, has a longstanding relationship with Mr Woodford. The stockpicker was a great proponent of hers while he was at Invesco Perpetual, and was instrumental in her appointment as chair of Stobart Group in 2013, though a boardroom coup forced Mrs Palmer-Baunack to step down only 10 weeks later.
Woodford Investment Management has signed a letter of intent to vote in favour of the offer at the forthcoming court meeting, along with Invesco Asset Management, Axa Investment Managers and Aviva Investors.
BCA and Ms Palmer-Baunack declined to discuss the offer.
The company sold 1m cars for the first time last year, representing a 6.5 per cent increase from 2017, after a third consecutive year of strong growth, according to accounts filed to Companies House.
Founded by former naval officer David Wickins in 1946, the company’s shares have gained more than 80 per cent since its initial public offering in 2014, before which it had a string of private equity owners.
TDR said it planned to carry out a review of BCA’s operations after the deal was completed and all of the non-executive members of the BCA Board would resign.
“TDR believes that BCA is well placed to benefit from further growth within the automotive services industry,” the buyout group said.
According to a person familiar with the deal, TDR is planning to ride the growth of the business with a potential listing or sale to a rival private equity firm in about five years. TDR declined to comment.