British car retailer Pendragon has tried to drive a coach and horses through the takeover tussle for rival dealership Reg Vardy - by proposing a three-way merger with fellow bidder Lookers that could create a combined group worth a total of more than £900 million.
Pendragon, led by chief executive Trevor Finn, said it had made two formal approaches to the board of Lookers, which has already tabled a £492 million agreed bid for Reg Vardy.
Pendragon added that its indicative offer values Lookers at 600p a share, although the board at the retailer has rebuffed its advances and “was not prepared” to discuss the proposal.
The firm said it was going public with its plan in order “freely to discuss” its proposition with Lookers shareholders.
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Combining the three car firms would produced a company with about 10 per cent of the market for car retailing in the UK, which has suffered from fragmentation and a surfeit of small dealers.
Pendragon, which was in danger of being excluded from the previously agreed deal between the two rivals , said it wanted to pay 800p per Reg Vardy share and carry out an exchange offer for the entire share capital of Lookers.
The move is the latest twist in a saga that has seen Pendragon refuse to concede defeat in the battle for Reg Vardy, despite being trumped by the agreed bid by smaller rival Lookers.
It comes amid increasing consolidation in market for both new and used cars, against gradually decline new sales in the UK.
Pendragon initially began by selling luxury cars such as Jaguars, but has since diversified into a wider range, including Ford and Vauxhall and also sells second-hand cars.
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It also comes amid concerns about the level of debt Lookers would be taking on through its proposed acquisition, to be carried out through a scheme of arrangement.
“Pendragon believes that the synergies available from a three-way combination of Lookers, Reg Vardy and Pendragon should be considerable and, through a share exchange offer, Lookers shareholders would benefit from the proven track record of Pendragon management of integrating large acquisitions and extracting synergies,” Pendragon said this morning.
“Pendragon is confident it has the management experience necessary to integrate the businesses of both Reg Vardy and Lookers simultaneously and successfully.”
Pendragon is the larger of the three car retailers, with a market value of more than £630 million. Reg Vardy is valued at just over £510 million and Lookers is worth just £181.85 million based on last night’s close.
The £492 million agreed deal between Lookers and Reg Vardy is an all-cash transaction.