09 June 2021

Stock market listed retail group Cambria has recommended shareholders accept CEO Mark Lavery’s buy-out offer of 80p a share to take the company private.

The offer values Cambria at £80 million, before talk of an offer was raised in March 2021, the share price was 66p and had been as high as 71p in the previous 12 months.

Mr Lavery’s Bidco company that is making the offer, has also presented an alternative scheme offering shareholders a share in Bidco. A spokesman for the firm explained: “Each new Bidco share will be immediately exchanged for two consideration shares by way of a call option exercised by Cambria Investments. The consideration shares are non-transferable and do not carry any voting rights.”

This offer is also limited to a maximum of 20% of the company.

The buyout is expected to go ahead as Mr Lavery already owns 40% of Cambria even though a 75% majority is required. The timing of the MBO is expected to see the company become private before the end of this year.

Mark Lavery, CEO Cambria

In May, the group revealed half-year results to 28 February, in which the group saw a 16.0% drop in revenue to £254.7 million, however, underlying profit before tax was up 55.5% at £9.8m. Underlying net margin was up to 3.83% against 2.07% last year.

Cambria also reported that “units of new vehicle sales reduced by 16.6%, as anticipated, with an 8.8% reduction in average profit per unit” while used car sales were “down 30.8%; partially offset by a 18.2% improvement in average profit per unit”.

Commenting on the offer Mr Lavery said: “I am pleased that the Independent Committee has unanimously recommended the cash offer. The cash offer represents an opportunity for Cambria shareholders to realise their investment in cash at a material premium to the historical share price of Cambria where there has been a low level of trading liquidity or, where a shareholder might be prepared to do so, to retain a shareholding through the Alternative Offer.

“I am proud of the excellent job that has been done by the team over the last 11 years since Cambria’s IPO to substantially transform the business but these achievements have not been reflected in the equity market’s valuation or perception of Cambria. I am mindful of a rapid period of change for the industry and that there may be headwinds ahead, but I look forward to capitalising on the growth opportunities ahead, and creating value for customers, employees and brand partners under private ownership.”

Cambria Chairman Philip Swatman, added: “Cambria has successfully executed a strategy over the last 11 years of public ownership. However, while Cambria has demonstrated considerable resilience, significant business uncertainties continue to persist in the near and medium term for a company of our relative size. In recommending the cash offer to the Cambria shareholders, the independent committee believe it is in the best interests of all stakeholders, enabling them to realise significant and immediate value, whilst enabling the long term success of the business. Therefore, the Independent Committee are unanimously recommending the cash offer.”

Tags: Cambria, management buyout, Mark Lavery, MBO