Trevor Finn’s firm trumped Lookers’ 875p per share offer with a 900p new bid last Friday, which Reg Vardy’s board recommended to investors. Pendragon had already built up a 27.9% stake in the group, from buying shares and exercising its call option on Sir Peter Vardy’s shareholding.
This made it impossible for Lookers’ own bid, a scheme of arrangement, to gain the necessary approval of 75% of Vardy’s investors. This week it withdrew.
Pendragon had already fired a shot across Lookers’ bows last month when it suggested an audacious three-way merger which would allow it to consolidate all three groups. Finn insists it was a serious proposal, although it was also an attempt to shake-up the Lookers team.
The offer included the condition that Lookers would withdraw its bid for Reg Vardy. Lookers rejected the plan, stating it undervalued its business.
It’s unlikely Pendragon will immediately pursue Lookers, but it could make an offer within 18 months – Finn’s average absorption period for big purchases.
Barring any last minute hiccups (Sytner was rumoured to be interested at one stage), the acquisition will create a group with 385 outlets and more than £5bn turnover. Pendragon will have a dominant position with Ford PAG brands – it will have one-third of Jaguar’s outlets and more than half its sales volume – and Vauxhall.
Uncertainty surrounds the Volkswagen and Renault sites, both franchises that Pendragon does not hold. Finn sold back the Audi sites to Tony Bramall after buying CD Bramall in 2002 and is tipped to have a similar agreement in place with Sir Peter Vardy for the VW dealerships.
Despite the final offer price being 150p higher than Pendragon’s original 750p bid, its shares rose 36 points to 549p, while Vardy’s increased by 37 to 895p.