Blake Morgan and Gambit steer multi-millon pound deal to success
Halfords Group plc (“Halfords”) has announced (Tuesday 24 May 2016) that it has acquired Swansea based Tredz Limited (“Tredz”) and Wheelies Direct Limited (“Wheelies”).
Established by founders Keith and Michael Jones as a single bike shop in Swansea in the 1980s, Tredz and Wheelies now employ around 250 people. Tredz is an online retailer of premium bikes and cycling parts, accessories and clothing. Wheelies is the UK’s largest provider of bicycle replacement for insurance companies.
Collectively the two businesses generated revenue of circa £32m for the year ended 29 February 2016, reflecting growth of 36% over the prior year, and EBITDA of £2.3m. The initial cash consideration is £18.4m and has been settled from the Halfords Group’s existing borrowing facilities. Dependent upon the financial performance of Tredz in the year ending 28 February 2017, there will be an element of deferred consideration payable in 12 months. The total purchase price is expected to equate to an EBITDA multiple of around 7 times and the acquisition will be earnings enhancing from the first year of ownership.
Tredz and Wheelies were advised by law firm Blake Morgan and corporate finance specialists Gambit.
Keith Jones, Group Managing Director of Tredz and Wheelies, commented:
"Blake Morgan's corporate team provided us with the clear, commercial advice and guidance we needed throughout the transaction. Their commitment and support was fantastic and their ability to find solutions to difficult issues proved essential to get the deal to completion. The whole Blake Morgan team was excellent, with their employment, real estate, IP and competition experts called upon to resolve issues at various stages of the deal. They also brought the deal home on budget despite a variety of unforeseen delays and complications!"
“We are also very grateful to our lead advisors Gambit Corporate Finance, who have worked with us on a strategic value maximisation initiative over a three year period. Frank Holmes, Partner, has sat alongside the board as a quasi Non-Executive Director for the past three years, providing regular strategic and commercial advice on a wide variety of external and internal matters. Ably assisted by Simon Marsden, Director, their input has helped us identify and source a market leading partner in the sector, Halfords, which will enable the businesses to flourish in the years to come.”
Rob Cherry, lead partner at Blake Morgan on the deal, said: "Having worked with Keith, Mike, Jeremy and Nick at Wheelies and Tredz over the last few years, we at Blake Morgan were delighted to be able to help them to realise their investment in these fantastic businesses, which have been a significant success story in South Wales. I am confident that, with the ongoing support of that team, the businesses will continue to go from strength to strength under Halfords' ownership. We are grateful for the trust they placed in us to help deliver the deal and wish them every success in the future."
Frank Holmes, Partner at Gambit Corporate Finance added: “We have had the pleasure of working with these companies through a value maximising programme and succession planning strategy which has culminated in a successful transition, which will enable the businesses to grow successfully. ”
Simon Marsden, Director at Gambit Corporate Finance: “As with many transactions, a successful outcome is quite often predicated on optimum market timing. Consolidation in the bicycle sector is at its peak and our clients have benefited from this opportunity.”