Pendragon chief executive Trevor Finn, who expects the purchase to be finalised towards the end of February, does not rule out re-employing certain executives, however. “If there are roles we can agree on, this will be discussed,” he says.
The deal will create Europe's largest group, turning over more than £3.5bn from 220 outlets. It will also boost profits – Pendragon expects full-year pre-tax profits to exceed £37m, while CD Bramall's interim pre-tax profits, posted in August, topped £17m. Finn intends to retain the majority of the outlets, pointing out that the franchise and geographical fit is extremely good.
“This isn't about cost cutting, it isn't about job cuts,” he says. “It's about efficiencies through systems and the smart use of IT.”
Talks between the two companies only started in November, indicating Tony Bramall's receptive mood towards Pendragon's approach. The reason is clear – Bramall is now 69 years old and has no obvious family successor to take control of his business. He holds 12.64m shares and stands to make £76m from the deal.
Pendragon will retain the CD Bramall trading name – its custom for new purchases. Finn also expects to retain most franchises, including both Mercedes-Benz market territories. DaimlerChrysler UK, when restructuring its franchised network in 2000, stated that no retail group would be allowed to operate more than one territory. Pendragon now has two, but Finn sees no issue with retaining both.
“The changes in block exemption are clear and concise regarding the contractual situation – we expect to be bound by the rules,” he says. Under the revised regulations, carmakers are not allowed to withdraw a franchise simply because the dealership has been sold. “This is an opportunity for us to test the ground regarding opening up and broadening our relationships with manufacturers,” adds Finn. “We have scale with several manufacturers and we want to continue broadening that relationship.”
Further consolidation is inevitable – Pendragon still only has 7-8% market share – although Finn is unwilling to speculate how large the group could become. “We just want to be in a position where we are one of the major players when this consolidation takes place,” he says. Pendragon will continue expanding in America, where it has 10 sites representing Land Rover, Jaguar, Aston Martin and Lincoln Mercury. In Germany, where it has six outlets, it is waiting for the market to pick up before further purchases.
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