Lookers has received written notifications from three of its vehicle manufacturer partners stating their intention to discontinue in whole or in part their relationships with Lookers in the event of it being acquired by Pendragon.
The unnamed franchises represent £224 million of revenues and 18.2% of Lookers’ total revenues.
Pendragon put forward its offer to Lookers shareholders at the start of this month. It is offering 1.15 its own shares for every Lookers share they hold, valuing Lookers at £259 million. Pendragon wants all acceptances of its offer before April 27.
But Ken Surgenor, Lookers chief executive, said: "The notifications that we have recently received highlight the substantial commercial risks of Pendragon's all paper offer. We strongly urge Lookers shareholders not to put the value of their investment in Lookers at risk by accepting this wholly inadequate offer from Pendragon."
In the event of a change of control of Lookers, the manufacturers that are represented by these franchises have the right under the existing franchise or other agreements to terminate their agreements, or to require the franchise business to be transferred back to the manufacturer.
Lookers will be writing to its shareholders next week to explain its reasons for recommending rejection of this all share offer from Pendragon. It also urged shareholders to take no action before receiving the document which will be posted by no later than April 20.