AM Online

Lookers tops bids

Six dealer groups made bids for Dutton Forshaw with Lookers triumphing to take its turnover above £2bn.

Lookers is paying Lloyds TSB Group £60m in cash for the business which held 14 brands’ franchises – £28m for Dutton Forshaw and £32m in repayment of debt. The deal includes £40m worth of property.

Maurice Rourke, Dutton Forshaw managing director, has not joined Lookers.

“I would like to stay in the industry but need time to consider my next move,” he said. Former D-F operation directors Paul Wilkinson and Alister Leith have moved.

In June’s AM100, Lookers’ was in fifth position with a turnover of £1.65bn and Dutton Forshaw at 17 on £406m. In the last financial year, Dutton Forshaw’s operating profit was £3m. Lookers is expected to increase the profitability of acquisitions.

Analysts calculate Lloyd TSB’s temporary excursion into motor retail cost it a relatively small amount when acquisitions and investment are balanced against profits and the sale price.

According to a Lloyds TSB statement, the effect on its accounts “is not expected to be material”.

David Oldfield, managing director of the bank’s asset finance division, says there were benefits to the bank in owning Dutton Forshaw, but added: “In a consolidating industry, we concluded disposal was right for shareholders, staff and customers.”

Industry consultants are sceptical about its motives.

“For Lloyds TSB there was always superficial logic to getting into selling fleet disposals,” said one. “This year it had a choice of either making Dutton Forshaw much larger, or getting out.”

Another consultant said: “There are benefits to Lookers in the dealerships it has acquired but warding off more potential bids for the group following Pendragon’s unsuccessful one has to be a factor. It makes Lookers more difficult to integrate in the eyes of potential buyers.

“But Lookers faces a problem. It has ceased to be a business with twin regional groups in north-west England and Northern Ireland, and has increased its interests in the south-east and now has a presence in south Wales. Lookers will have some of the management strains faced by Pendragon.”

Ken Surgenor, Lookers chief executive, said one of the reasons for the purchase is the addition of market areas in southern England. “We want to build scale with the right manufacturers.”

Dutton Forshaw adds seven Ford dealerships to the one Lookers bought recently in Sheffield. “We have scale with Vauxhall, and want the same with the UK market leaders,” Surgenor said.

Another key factor is the doubling of Mercedes-Benz dealerships to eight. Dutton Forshaw’s four M-B outlets in Kent are added to Lookers’ territory in Sussex.

Lookers’ VW retail interest rises from five to nine sites and the deal sees the group take on its first Skoda site.

The purchase marks an end to Lookers’ interest in Inchcape’s 47 sites. It is also believed to be one of the groups that has held talks with Infiniti, which launches in the UK next year.

If you are not a registered user your comment will go to AM for approval before publishing. To avoid this requirement please register or login.

Login to comment

Comments

No comments have been made yet.