Pendragon proposes three-way merger of car dealers

Pendragon proposes three-way merger of car dealers

	Published : Fri, 27 Jan 2006 18:25 By : Amy Watts Print this Story

LONDON: British car dealer Pendragon Plc. revealed that it had approached rival dealer Lookers Plc. proposing a consolidation involving the two and the third dealer, Reg Vardy Plc., but Lookers had rejected the approach.

Pendragon said in a statement that it proposed to carry out the deal through its existing 800 pence-a-share cash offer for Reg Vardy and an all-share offer for Lookers.

Lookers has recently made a 492-million-pound agreed all-cash deal with Reg Vardy trumping Pendragon's.

In a statement, Pendragon said it has made an indicative offer that values Lookers at 600 pence-a-share. The Lookers board rejected the proposal. It is, therefore, making the offer public in order to take it directly to the Lookers' shareholders.

The three-way tie-up, if it materialises, will create a company worth about 900 million pounds controlling some 6 per cent of the British car market. This will not attract regulatory concerns, Pendragon's chief executive Trevor Finn said.

Reg Vardy had agreed to the offer of 800 pence-a-share offer in early December, but the latest offer from Lookers had unsettled the balance.

Pendragon said Lookers had earlier rejected its proposal of one new Pendragon share for one Lookers share after the offer was made on 21 December. Pendragon then revised the offer with 1.15 shares for one Lookers share, but Lookers said its board is not willing to discuss the issue.

Annesley-based Pendragon had its dealership of Jaguar and other luxury cars, but it has now diversified into selling a wider range of cars, including used cars. It is the largest of the three with a market value of more than 630 million pounds. Reg Vardy is valued at 510 million pounds and Lookers is worth just 181.85 million pounds.

In Britain new car sales dropped 5 per cent in 2005 and are expected to further drop for a third consecutive year in 2006, according to the Society of Motor Manufacturers and Traders.

Shares of Lookers rose 56.25 pence, or 11 per cent, to 565.25 pence while Pendragon jumped 41.5 pence, or 8.6 per cent, to 524 pence and Reg Vardy down 49 pence, or 5.4 per cent, to 861 pence.