The completed acquisition by Britain's biggest vehicle dealer group of the No. 2 AM 100 group will result - subject to disposals - in a single group holding over 280 local franchises, and a marked acceleration in consolidation in the sector.
Pendragon's 600 pence offer represents a valuation of £230.3 million and a 24.1% premium on CD Bramall's market price on 14 January - CD Bramall announced a potential bid a day later. Pendragon has so far secured about 48% of the voting rights with CD Bramall Board support. CD Bramall is to pay a second interim dividend of 7 pence in respect of the financial year ended 31 December 2003, which will be paid irrespective of whether or not the offer becomes unconditional.
Pendragon has agreed that, subject to the offer becoming unconditional, CD Bramall shareholders who accept it will be entitled to receive 'Contingent Consideration' based on a proportion of any VAT repayment following CD Bramall's recent claim on MH Customs & Excise.
Trevor Finn said today: “We are making this offer to acquire CD Bramall at one of the most exciting times for motor car retailers in the UK. The recent changes to retailers' franchise agreements are likely to drive further consolidation in the industry and through this transaction we are confirming our position as the number one motor car retailer in the UK.”
Tony Bramall, Chairman of CD Bramall, said: “I and my directors are pleased to recommend the offer from Pendragon to our shareholders. We believe that our industry will continue to be subject to restructuring and that groups of a substantial size will be able to take commanding positions in the industry over the next few years. The acquisition by Pendragon should bring attractive opportunities to the enlarged Pendragon Group and should provide significant opportunities for CD Bramall employees.”
Pendragon's underlying profits for 2003 are expected to exceed £37 million; its turnover was put at £1.724 billion, and CD Bramall's at £1.645 billion in the latest 'AM 100' update of mid-November last year. CD Bramall's turnover for 2002 was £1.39 billion. It recorded an interim pre-tax profit for the first half of 2003 of £17.1m on sales up 57% to £905 million.
Several other motor retail shares advanced this morning following news of Pendragon's bid.