Lex buys Multipart as profits lose speed

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The Independent Online
Lex Service, Britain's biggest car and lorry dealer, yesterday moved to beef up its presence in the after-care market with the pounds 73m acquisition of Multipart, the former commercial vehicle parts operation of Leyland DAF.

The company announced a one-for-six rights issue at 280p to finance the deal, but a 23p fall in the share price to 327p yesterday owed more to a disappointing half-year trading statement. Lex unveiled a 26 per cent fall in pre-tax profits to pounds 21.9m for the six months to June, around pounds 2m to pounds 3m below expectations, and said short-term demand from private car buyers was expected to remain weak.

Sir Trevor Chinn, chairman, said: "Multipart represents a significant change in the scale and balance of the group, as well as providing a strong stream of earnings, further reducing our dependence on the sale of new cars."

Profits at Multipart were pounds 11.2m in the year to last December, putting an exit p/e ratio of around nine on the deal, after taking account of interest on pounds 12m of debt being assumed by Lex. Had Multipart been acquired last year, it would have added 2p to last year's earnings per share of 29p, Sir Trevor said.

About a dozen managers who, with institutional backing, bought Multipart from the wreckage of the Leyland DAF receivership for pounds 38m in August 1993 are set to make "several million pounds" from the sale.

Lex's interim results were hit by a pounds 1.7m swing into pounds 1.4m losses in the car importing subsidiary, mainly due to a shortfall of 2,000 cars in the delivery of the new Hyundai Accent model from Korea. There was also an pounds 800,000 hit from the failure of the local partner in a French fork-lift truck leasing joint venture, leading to a pounds 2.7m adverse swing in results from associated businesses.

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