Halfords makes move into car servicing

Nationwide's 224 sites will be rebranded as Halfords Autocentres and it is expected that Halfords will roll out a further 200 centres, creating 1,000 jobs.

Halfords said the rapid increase in demand for its in-store 'we fit' services highlighted the opportunities in the car maintenance market.

Chief executive David Wild said: "Our expansion into the adjacent car servicing and repair market is an exciting and logical move for Halfords.

"Nationwide is a high quality business and represents an opportunity for significant growth."

The largest UK provider of MoT and car servicing, Nationwide employs 900 mechanics and deals with around 500,000 customers a year. It has been owned by private equity fund Phoenix since 2006.

The current management team of chief executive Duncan Wilkes and chief operating officer Bill Duffy will remain in place following the acquisition.

Nationwide generated revenues of around 97m last year, while

underlying earnings are likely to be in the region of 10m, up from 5.8m a year earlier.

Halfords hopes to double earnings to 20m in its third year of

ownership, while it should also benefit from cross-marketing opportunities.

The company, which employs 10,000 staff and operates 469 stores, has been one of the strongest performers in the UK retail sector after strong demand for cycling and camping goods.

Pre-tax profits rose 24 per cent to 60.9m for the 26 weeks to October 2 and the company said yesterday it continued to trade in line with expectations following a strong Christmas period.

The move was welcomed in the City as Halfords shares rose almost 10 per cent.

Andrew Wade, an analyst at Numis Securities, said the deal represented "excellent use" of Halfords' strong cash genera-tion.

He added: "As well as providing another leg of growth to a solid core business, we see significant scope for cross-marketing and synergies."

As a direct result of the acquisition, Mr Wade raised his forecast on 2011 pre-tax profits by 6m to 130m.

He is looking for profits of 114.4m in the current financial year.