The luxury car retailer is selling Marshall Leasing to a Bank of Ireland subsidiary for £42.5m.
Companies: Marshall Motor Holdings Plc
Marshall Motor (LON: MMH) has announced today it will do away with its wholly-owned leasing division, Marshall Leasing.
The sale to the Bank of Ireland subsidiary N.I.I.B Group is worth £42.5m and will allow MMH to focus on its core retail operations.
The initial cash from the sale will be used to reduce some of the Group's £101m debt.
Tthe fleet management and car leasing business, which focuses on UK Corporates, has been with the Group since its inception in 1979.
Shares in MMH jumped 4% with the announcement.
Marshall Motor Group CEO Daksh Gupta commented:
"The strategic disposal of our leasing business is an important step for MMH. It further strengthens our financial position and allows us to remain focused on driving our core retail operations. In a changing and consolidating retail landscape, we see various exciting opportunities ahead which, with the support of our brand partners, we are now even better positioned to exploit.
Singers put out a note on the Group and the sale, saying:
"The market had been looking at ‘total’ debt though including Leasing, and from that perspective the disposal is transformational, reducing forecast net debt from £116m to c£10m."
The sale significantly improves the Group's balance sheet, moving it to a pro-forma position of £4.6m at the half year ended in June.
Consensus forecasts are baking in a doubling of both Revenue and Net Profit for MMH in the 3 years to 2017. The Group trades at a PE ratio of 6x versus the industry median of 13x, which may be due to the Group's small operating margin of 1.5%, and currently has a market cap of c. £124m.