Marshall Motor sells leasing segment for £42.5m

Automotive retail group Marshall Motor Holdings has announced the strategic disposal of its wholly-owned leasing segment, Marshall Leasing, to Northridge Finance for £42.5m in cash.

The company said the sale will allow it to focus on its core motor retail business and to continue its strategy of driving organic growth and increasing its UK geographic footprint through targeted acquisitions with existing brand partners.

Proceeds from the disposal will initially be used to reduce existing debt levels. The group's reported net debt at 30 June 2017 was £101.1m but as a result of the disposal,its pro forma 30 June 2017 balance sheet would have been ungeared with net cash of around £4.6m.

The sale is expected to be dilutive to earnings per share in the year to the end of December 2017 although there will be a gain on disposal.

Chief executive officer Daksh Gupta said: "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.

"MLL has been an important part of our group for many years. On behalf of the board I would like to thank all my leasing colleagues for their significant support and contribution over this period and wish them well for the exciting times ahead under new ownership."

Jamie Constable at N+1 Singer pointed out that the market had assigned a negative value to leasing and so realising £42.5m should have implications for the share price.