Exchange is no robbery
The Halfords takeover of Nationwide Autocentre is a cracking all-Midlands deal supported by local advisers of the type we were all desperate to see last year. But it might also be taken as a sign of our listed companies starting to take the sort of strategic decisions they have avoided in recent times.
Halfords is a great local success story. Its impressive recent figures are too easily explained as a product of the current environment. The fact it sells bikes and other outdoor equipment has been boosted by the recession and the increase in so-called staycationers who are cancelling plans for expensive holidays abroad and holidaying in the UK instead.
But that’s only part of the reason Halfords has done well. After all, Blacks, another of our local PLCs, is also in the leisure sector and has had a tough time of it in the past 12 months. Being in the right sector is not usually the reason why a business fails or succeeds. Woolworths didn’t fail because it was in retail; it failed because its rather confused offer no longer worked.
Halfords is an exceptionally well-run company and its management are pretty clear about where they want the business to go. By taking over Solihull’s Nationwide Autocentre, it has made a strategic move in a related area. Known and trusted for selling car parts and accessories, it isn’t a great leap for it to move into car repairs. Nationwide already has a wide network of auto-repair outlets, which will be re-branded under the Halfords name, and there are ambitious plans for rapid extension of that network.
It will be interesting to see if more local companies follow Halfords onto the stock market this year. Last year was a write off as far as listings were concerned, but many observers believe that this year could see a surge of activity as companies rush to market. Pets at Home has already done so, and although New Look has recently backed away from taking this route, there are plenty of other names of would-be listers being bandied around. And at the time of writing, grocery distribution business Ocado is still planning to float in May.
Arguments for and against seeking a listing have been well rehearsed, but while traditional forms of funding are still tight, companies may see the IPO route to raising cash as an increasingly attractive option. New Look’s decision was taken as a result of market volatility, but that is a reaction to a short-term problem. Timing is important, of course, but is shouldn’t affect strategic decision-making in the long term.
My view is that we will indeed see increased stock market activity this year, both in terms of new listings and companies already listed looking for acquisition opportunities.
All of which would be great news for the regional deals market, which is currently busier than it has been for some time. There are still problems of course – not least the aforementioned funding issue – but deals are being done and the fact that company owners are increasingly running a dual process, considering a sale or a listing, suggests a desire to make decisions that didn’t exist in 2009 when a bunker mentality was the order of the day.
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