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The big picture: Time’s running out for Lookers

The deadline is drawing near for Lookers. It has very little time to sort out funding if it plans to table its own bid for Reg Vardy.

The latest statement, issued on December 21, tacitly suggested the company was having problems raising sufficient funds to take on Pendragon, which is currently in pole position with its 800p per share offer already agreed by the Vardy board.

It leaves Pendragon in limbo. It was forced to extend its deadline from December 28 to January 18 for shareholders to accept the bid after securing just 1% additional shares above the 27.2% irrevocables from the Vardy family.

The situation is getting a bit messy, which isn’t ideal for any party, nor indeed Reg Vardy’s 5,100 employees. Media reports abound that Pendragon will dispose of some underperforming sites, and sell and leaseback some of the property to cut its gearing post-acquisition.

And then there’s the scenario facing chief executive Sir Peter Vardy. He’s tipped to return to the industry, possibly by buying back some of the sites as he shapes a business for his two sons, one employed by Vardy in the group’s property division, the other in operations.

Other rumours suggest a carve-up between Pendragon and Lookers, although this would only be possible in a pre-acquisition handshake. One would still have to buy the group whole, and Pendragon boss Trevor Finn is likely to want to keep most of the business, which is a good fit.

His final option, should Lookers come back with an offer, is to withdraw from the bidding – and buy the enlarged Lookers group in a year’s time.

Is that likely? On the surface, no, because Finn could miss out on the massive amount of freehold property up for grabs. But, as Lookers’s policy has been to retain freehold, this property could still be available a year down the line.

Expect Lookers to respond within a few days, otherwise the City will start asking questions.

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