Henlys drives ahead with bus expansion

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The Independent Online
Shares in Henlys, the car dealer and coach builder, jumped 44p to 380p after the group, which narrowly escaped takeover by Cowie Group in 1992, announced a big expansion of its coach and bus division.

Henlys, whose shares have risen 10-fold since bouncing back from losses in the early 1990s, is to spend £41m acquiring leading positions in British double-deck bus body and Canadian coach body manufacture.

The deals are to be part financed by a £13.5m share issue at 330p, a year after the company raised £26m in a rights issue to expand its chain of car and van dealerships.

Robert Wood, Henlys' chief executive, said: "These transactions represent an exciting development in the already successful transformation of our coach and bus division."

Since Mr Wood took over at Henlys, the company's fortunes have been transformed as the benefits of increased spending on the UK's ageing fleet of buses and coaches has brought Henlys back into the black.

A similar process is at work in North America, where spending on the estimated 30,000 inter-city coaches lagged in the US and Canada during the recession below the level required to replace vehicles after their useful life of between 15 and 20 years.

From record sales of 2,000 in 1989 the market contracted to 1,000 in 1991, since when it has been recovering steadily.

That should help Prevost, the Canadian company in which Henlys plans to take a 49 per cent stake alongside Volvo.

The £31m Henlys is paying for its stake buys half of a company that made pre-tax profits of C$18.6m (£8.7m) in 1994, up from C$8m in 1993 and C$11m in 1992.

Sales in the first quarter of 1995 are reported to be substantially ahead of last year.

In the UK, Henlys is paying £10m for Northern Counties, a Wigan-based designer and builder of double-deck bus bodies. Northern supplies about 45 per cent of the UK market and in the year to March made profits of £1.4m on sales of £15.6m.

Henlys believes the deal will give it access to lucrative Far Eastern markets as well as expanding its range out of single-deck vehicles.

The latest jump in the share price is another reward for shareholders who fended off Cowie's unwelcome approach three years ago. That offer valued Henlys at just 85p a share.