Reports from both The Telegraph and The Times have emerged suggesting that a potential merger between Halfords and van hire firm Redde Northgate, aiming to create a conglomerate worth over £1.3 billion, is currently on hold due to disagreements over pricing.
The Telegraph, citing a City source, revealed that Redde Northgate had initially proposed a nil-premium merger. However, discussions reached an impasse as the two companies failed to align on valuation terms. It’s believed that the Halfords board concluded that the terms outlined in the proposal undervalued the company.
Despite the setback, there is speculation that a revised merger proposal might be reconsidered if the valuation gap between the parties narrows. Both newspapers reported that the Takeover Panel was informed of these discussions, which occurred in the past few months.
According to The Times, sources indicate that while discussions touched upon the potential integration of the businesses, concerns arose over the valuations of both companies. The source mentioned, “Both share prices weren’t doing fantastically well at the time, so there is nothing live at the moment. However, it could come back.”
Halfords, known for its expertise in automotive services and products, has a long-established presence in the market. Redde Northgate, formed in 1992 and rebranded as such in 2020 after merging with a van rental company, has a history of strategic acquisitions, including the purchase of FMG for £42.3 million in 2015 and acquiring repair centres from Nationwide Accident Repair Services in September 2020, subsequently renaming it FMG RS.
The potential merger, if realised, could create a formidable entity in the automotive and vehicle services sector. However, the current stalemate underscores the complexities involved in aligning the valuations of the two companies. Industry insiders suggest that a renewed bid may be on the horizon if negotiations can bridge the existing valuation disparities.
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