Consolidation move on in UK car dealership sector

Car dealers Pendragon today shocked the City by revealing its was interested in bidding for both Lookers and Reg Vardy to create the undisputed king of the UK car dealership sector.

Nottingham-based Pendragon announced that it made two approaches to Lookers after tabling a £450m (€656m) cash offer for Vardy last month, but saw its overtures rejected each time.

The stakes were then raised 10 days ago when Lookers had a £492m (€717m) offer for Vardy accepted.

Pendragon said it was lifting the lid on its approaches to Lookers “in order to allow it freely to discuss” its all-share offer worth £214.4m (€312.5m) with its shareholders.

In a statement, it added: “Pendragon believes that the synergies available from a three-way combination of Lookers, Reg Vardy and Pendragon should be considerable.”

Pendragon added that it intended to fulfil an agreement to buy the 16.6% stake in Reg Vardy held by the son of its founder and then vote against the acquisition by Lookers.

With many other directors prevented from voting in favour of Vardy being acquired by Lookers, the company added that it only needed investors holding 6.4% of shares to oppose the takeover deal for it to fail.