TDR Capital in advanced talks to buy BCA

24 June 2019

Private equity group TDR Capital is in advanced talks to acquire UK auction business BCA Marketplace.

The deal would value the auction house, which also owns the WeBuyAnyCar.com website, at £1.9 billion (€2.1 billion). The talks come almost a year after discussions with another equity firm, Apax Partners, collapsed, with BCA believing that deal ′undervalued’ the company.

BCA is involved in a number of different markets across the automotive sector, including finance and vehicle transportation. The business has expanded into Europe in recent years to become the continent’s biggest marketplace. It is this growth that has made BCA attractive to investors.

The company’s shares have dropped by around 10% over the last twelve months, making it even more attractive to private equity firms – highlighting a trend of buyout groups increasingly hunting for undervalued public companies. Executives at BCA believe the auction business’s shares have been mispriced by public investors.

BCA sold a million cars for the first time last year, representing a 6.5% increase from 2017, after a third consecutive year of strong growth. The former British Car Auctions benefited from a rise in volumes across all its divisions last year.

Advanced stage

′Talks with TDR are at an advanced stage. Having considered the proposal carefully together with its advisers, the Board of BCA confirms that should TDR or an entity controlled by TDR announce a firm intention to make an offer, subject to terms, the Board of BCA intends to recommend unanimously that BCA’s shareholders accept the offer,’ the UK company said in a statement, adding that there was no certainty an offer would be made.

BCA will present its 2018/19 annual results later this week, when it is expected that a deal will be confirmed. The company has said it will release further details regarding the potential acquisition in due course.

The company floated in the spring of 2015, through a reverse takeover by Haversham Holdings. priced at £1.50 (€1.68) a share. The proposed deal will also include a 7p-a-share (8 cents) dividend, making the offer worth £2.50 (€2.80) a share.

The investment would be a boost for the UK’s automotive industry, which has seen carmakers and suppliers, together with funding groups, reduce the amount of money being pumped into the market. With economic uncertainty and Brexit to contend with, many are waiting to see the outcome of the country’s exit from the EU until they make plans.