Disposal of the six businesses, in Ipswich, Bury St Edmunds and Colchester, is expected to be completed early in 2006. All staff will transfer to Lookers.
Lookers has agreed to pay £3.4m, comprising of £2.2m in goodwill and £1.2m of fixed assets. HR Owen states that the Premier Auto Group operation made £400,000 pre-tax profit in 2004, and had gross assets of £14.4m and net assets of £3.8m.
"In line with out stated strategy, this acquisition not only strengthens our portfolio of PAG businesses in the UK but also compliments our existing businesses giving us greater scale in the south east," says Lookers’ chief executive Ken Surgenor.
Lookers already has five Jaguar dealerships in Scotland and Northern Ireland, but the HR Owen businesses are its first in England. Its Land Rover outlets will increase from six to eight, and Volvo from four to six.
The sale leaves HR Owen with three remaining Volvo dealerships and two Land Rover outlets, all of which it is also expected to sell off, together with its four BMW and Mini business.
Chief executive Nick Lancaster led a review of the group’s franchises earlier this year and set a strategy to cut the number of franchises held in order to reduce debts. He wants to refocus on HR Owen’s more profitable specialist franchises, including Bentley, Mercedes-Benz, Ferrari and Aston Martin. The sale to Lookers is conditional on assignment of leases and shareholder approval. HR Owen recorded a £7.3m loss in the first half of 2005.
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