Halfords has reportedly been approached over a possible merger with van hire firm Redde Northgate to create a combined group worth of more than £1.3billion.

The two companies held detailed talks about a ‘nil premium’ tie-up – in which neither firm receives a premium to the market value of their shares – according to the Sunday Telegraph.

But the discussions were said to have been abandoned after the Halfords board concluded the deal would have undervalued it.

Redde Northgate could launch a fresh bid if the two sides can close the gap on valuation, the Telegraph reported. It added that the Takeover Panel, which governs such deals, was informed of the discussions that took place over the past few months.

Halfords sells bicycles and car accessories at its nearly 400 stores. It has a network of more than 600 garages providing car repairs and MOTs. Its shares are up 12 per cent for the year to date but are still half their value in mid-2021.

Undervalued: Halfords had a market value of £512m as of the close of trading at the end of last week

Undervalued: Halfords had a market value of £512m as of the close of trading at the end of last week

Halfords had a market value of £512m as of the close of trading at the end of last week. Redde Northgate is worth £836m.

Both firms declined to comment.

This post first appeared on Dailymail.co.uk

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