Pendragon is to acquire Ford's share in the Stripestar joint venture, it was announced this morning.
The UK's largest dealer group will pay £5.5m in cash for Ford's 49% share, giving it total control of Stripestar – including its borrowings expected to be in the region of £18m.
Stripestar was formed in September 1999 by Pendragon to hold its Ford dealerships and through shared ownership was designed to improve the financial returns to both parties. However, they have admitted performance has been 'slow'. Pendragon and Ford laid the blame on the pricing issue, such as the delay in the publication of the results of the Competition Commission investigation into new car pricing in the UK.
Pendragon has also said that further restructuring of its Ford dealerships is needed before the business can return to profitability.
In 1998 Stripestar returned a £2.5m profit. At the end of last year it recorded a loss of £8.4m. Its asset value at the end of 2000 was £15.1m.
Trevor Finn, Pendragon chief executive, said: “Since its formation, Stripestar has delivered an improved service for customers buying Ford vehicles, one of the two core objectives set out in the joint venture agreement. However, progress on delivering improved financial returns has been hampered by tough markets and a high overhead structure given both the location and geographical spread of the business. Acquiring the outstanding shares in the joint venture will help us improve these returns.”
Ian McAllister, Ford Motor Company chairman and managing director, said the agreement will enable the Stripestar Ford dealerships to “reach their full potential”.
Stripestar runs 28 dealerships in eight customer market areas.
The transaction is conditional on the approval of Pendragon shareholders at an extraordinary general meeting on November 2.