The company said the “Halfords Autocentre” business would be a major source of growth for the firm.
In addition to Nationwide’s existing 224 sites, it is expected that Halfords will open 200 new centres, creating 1,000 new jobs.
Shares in Halfords closed up 12 per cent at 439p following the announcement.
Halfords hopes the deal will help it double Nationwide’s earnings to £20m after three years.
“We believe this is a very good deal for Halfords and offers the group an additional entry point into the structurally attractive car maintenance market,” said Singer Capital Markets analyst Mark Photiades.
Nationwide, which has been owned by Phoenix, the private equity group, since 2006, employs 900 mechanics and serves 500,000 customers a year.
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.”
Wild added: “Nationwide is a high quality business and represents an opportunity for significant growth.”
Investec added that the acquisition represented “a strong strategic fit with Halfords’ core car-maintenance competence”.
Halfords had been linked with bids for both outdoor leisure group Blacks and privately-owned Hobbycraft in recent weeks.
DAVID FLIN AND PATRICK ROBB
BUYOUT house Phoenix handled the deal without external advisers, but Halfords called on the expertise of BoA Merrill Lynch and Investec to guide it through the process.
Andrew Tusa led the team at Merrill Lynch. He has been involved in a string of high-profile deals over the past six months including Gartmore’s stockmarket flotation and housebuilder Redrow’s £150m rights issue.
David Flin and Patrick Robb took charge at Investec. Flin advised on entrepreneur Mike Danson’s buyout of digital marketing company TMN last June. Robb recently helped Innovation Group place a rights issue and advised Care UK in discussions with bidders including Bridgepoint in September.