Whale and his management team tabled an offer last week for Ryland, which, at 155p a share, valued the business at £45.9m. The group, under the Rydnal bid vehicle, is waiting for a response from Pendragon, which has a 29.9 per cent share in Ryland.
Pendragon chief executive Trevor Finn says he is studying the details of Whale's offer – and has “not ruled out” launching his own bid. He admits Ryland's portfolio of franchises is attractive, but still needs to find out whether Whale's bid offered a fair price.
“The threat is clear – our franchises will not be renewed if this uncertainty continues,” Whale told AM. “It will significantly damage shareholder value. Ryland has already been forced to dispose of strategically desirable franchises with the loss of associated earnings.”
Whale has acceptances from 41 per cent of Ryland Group shareholders, and the offer goes unconditional once that figure exceeds 50 per cent. He wants to cancel Ryland's listing on the Stock Exchange Official List if he reaches that figure. “This will mean Ryland shares are no longer traded on any recognisable investment exchange, and will significantly reduce the marketability of any shares in respect of which the offer is not accepted,” he says.
Whale claims the bid has been made “more difficult” by booming share prices across the retail motor sector – Ryland shares stood at 150.5p following the news. He says the offer price is higher than the mid-market price of Ryland shares at any time since it joined the Stock Exchange's Official List.
Pendragon's stake was acquired from venture capitalist Guinness Peat Group last year at 130p a share. Guinness Peat itself tried to buy Ryland in July '02 – but was rejected.
“Should this offer not succeed, Ryland would face the imminent threat of further franchise terminations by its key prestige manufacturers,” says Whale. “If this happens, it may be possible to undertake a piecemeal realisation of individual businesses to manufacturer-approved candidates – but this strategy is fraught with uncertainty.”
In common with the rest of the industry, Ryland's new car sales franchises are set to be renewed for October 1, when the revised block exemption rulings become effective.
The Whale family, which already controls 36 per cent of Ryland, owns 60 per cent of Rydnal. The rest is held by Caribbean dealership Interamericana Trading Corp.