Henlys sells motor dealerships for pounds 57m

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The Independent Online
Henlys, the bus and coach maker, yesterday signalled a big shift in strategy by selling its motor dealerships for pounds 56.6m, twice the amount that the rival Cowie group offered for the entire company five years ago. The news was greeted enthusiastically by investors, and Henlys' shares jumped 25p to 441p, valuing the group at pounds 235m.

Meanwhile, as Henlys exited from the business, the Hull-based Dixon Motors announced the pounds 13.4m acquisition of Carnell, a car dealer and one of the UK's largest motorcycle retailers. Both moves illustrate the extensive shake-up among car dealers at the moment.

Robert Wood, Henlys' chief executive, said yesterday: "We were at a crossroads. Car dealership is a low-margin business and we were not making anything like the return from the bus and coach business. We listened to our shareholders and decided to withdraw from the sector."

When Cowie launched its hostile bid, motor dealerships produced the bulk of Henlys' earnings. But last year it accounted for only a fifth of profits and its growth rate has fallen way behind the bus division. Henlys has cashed in on the surge in orders for new buses from the likes of Stagecoach, First Bus - and Cowie.

Henlys will spend the proceeds from the deal on bus and coach acquisitions in the Far East and North America. "We supply over 40 per cent of the buses in the UK so we are looking overseas. We could have more than pounds 100m to spend," Mr Wood said yesterday.

Henlys has sold the division to a management buy-in team backed by Legal & General Ventures, the venture capitalists, which is considering floating the business within four years.

The upheaval in the motor industry has been caused by pressure from manufacturers on car traders to form regional dealerships. This has caused a consolidation of the industry which has seen the emergence of fewer, larger dealers.

Dixon plans to fund its expansion by raising pounds 17.6m via a one-for-three rights issue.