Sir Nigel says that since Pendragon’s original offer of 717p per share; the Lookers board posted its defence document, which he believes contains ‘a number of optimistic and unsubstantiated claims’.
“We believe the three-way combination of Pendragon, Reg Vardy and Lookers will create substantial value for all shareholders. The Lookers board’s defence document merely seeks to divert the attention of Lookers’ shareholders away from the merits of what we believe to be an extremely compelling offer,” said Sir Nigel.
He also states the Lookers’ profit forecast had to be taken ‘as an act of faith as the Lookers’ board has provided no clear explanation as to how it expects this forecast to be achieved’.
“You should ask whether the Lookers’ board is taking short-term actions to meet this forecast at the risk of the group’s long-term prospects,” he said.
Lookers’ unaudited first quarter results, released yesterday, showed that adjusted profit before tax for the first three months of the current year was up 90% to £11.0m (Q1 2005: £5.8m).
Looker’s turnover also increased by 17% to £385m (Q1 2005: £330.4m).
Lookers said the integration of its company into the Pendragon portfolio could lead to an increased risk for shareholders. However, Sir Nigel said: “The Lookers board has never implemented an integration of this size; they have never negotiated with manufacturers following an acquisition on this scale; they have never geared up their balance sheet to make a major acquisition of this size and then managed the debt down; and they have never created shareholder value by being able to participate in such a large scale acquisition. We have, and we have done all of these things well.”
Pendragon must have all acceptances for its offer before Thursday.
Closing his letter to Lookers’ shareholders, Sir Nigel said: “We encourage Lookers’ shareholders to participate in a great growth strategy which I feel certain will continue to deliver superior returns to investors. Accept the Pendragon Offer now.”