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Pendragon agrees purchase of Reg Vardy

Pendragon, the AM100-topping dealer group, has agreed to buy Reg Vardy Plc for £450m in cash.

The company agreed to pay 800 pence for each Reg Vardy share, a 21 per cent premium to Reg Vardy's share price on November 15, the last day before the takeover talks became public.

Pendragon will have about 300 of the UK's approximately 5,500 new car dealerships after the transaction.

Pendragon, based in Annesley, has expanded by acquiring luxury car dealerships in the UK, Germany and the US Pendragon bought CD Bramall Plc in January 2004, for £230m, doubling the number of its dealer outlets.

The deal is expected to be completed in January.

Sir Nigel Rudd, Pendragon's chairman, said: "Pendragon has pursued a strategy of growth through significant acquisitions and consistent with this we are pleased to announce this recommended offer for Reg Vardy. We believe that the combination of the two companies will strengthen relationships with principal manufacturer partners, lead to improved returns for our shareholders and provide greater opportunities within the enlarged group for all team members."

John F Standen, chairman of Reg Vardy (number two in the AM100), said: "Pendragon's offer represents an attractive price for Reg Vardy shareholders. Also, it reflects the considerable contribution of all the Reg Vardy colleagues over many years to create a major force in UK motor retailing. It should provide the opportunity for the Reg Vardy colleagues and customers to benefit from being stakeholders in what would undoubtedly be the UK's largest motor retailing group in a fast changing market place."

Reg Vardy, based in Sunderland, said on November 16 that Pendragon might make a cash offer for the company worth as much as £421m, or 750 pence a share. The price rose after Reg Vardy said it had received two more unsolicited approaches that were above Pendragon's 750 pence-a-share offer.

Pendragon is paying for the acquisition of Reg Vardy, which has about £20m of debt, with bank loans from a group led by Royal Bank of Scotland Group.

Reg Vardy made pretax profit of £43.8m on revenue of £1.72bn in the year that ended April 30.

Pendragon's pretax profit in 2004 was £65m pounds on revenue of £3.17bn.

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