The boards of large UK car dealership groups Pendragon and Reg Vardy on Monday said in a statement that Pendragon will pay GBP8.00 in cash for each Reg Vardy share – valuing Vardy at approximately GBP450 million – while rival dealer group and possible bidder Lookers said it was still considering its options.
The offer is 21% above the closing price of GBP6.62 per Vardy share on 15 November 2005, the last business day before Reg Vardy announced that it had received an approach from Pendragon.
Pendragon’s initial offer was GBP7.50 but this was raised after Vardy said it had received two additional approaches above that.
The Daily Telegraph reported on Monday morning that the approaches had come from another large UK dealer group, Lookers, and Vardy’s own management team.
In its statement, Pendragon said it had received irrevocable undertakings from the Reg Vardy directors and associates to accept the offer for 15,291,007 Reg Vardy Shares, representing approximately 27.2% of the issued share capital of Reg Vardy.
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By GlobalData“These irrevocable undertakings will only cease to be binding in the event that the offer lapses or is withdrawn,” the statement added.
Sir Peter Vardy has agreed to allow Pendragon to acquire, at its option, 9,348,111 Reg Vardy shares, or 16.6% of the share capital, also at GBP8.00 a share.
Reg Vardy directors, advised by Dresdner Kleinwort Wasserstein, “intend unanimously to recommend [shareholders] accept the offer,” the statement added.
Pendragon chairman, Sir Nigel Rudd, said in the statement: “We believe that the combination of the two companies will strengthen relationships with principal manufacturer partners, lead to improved returns for our shareholders and provide greater opportunities within the enlarged group for all team members.”
Reg Vardy chairman John Standen said: “It should provide the opportunity for the Reg Vardy colleagues and customers to benefit from being stakeholders in what would undoubtedly be the UK’s largest motor retailing group in a fast changing market place.”
The Daily Telegraph also said on Monday that Pendragon was planning a sale and leaseback of Reg Vardy’s freehold properties if the agreed acquisition goes ahead.
The paper added that Pendragon expects to sell a number of the poorer-performing Reg Vardy dealerships and is understood to be planning a sale and leaseback of many freehold sites.
The properties reportedly have a book value of around GBP150m but analysts have told the Telegraph they could fetch double that.
Spokesmen for Reg Vardy and Pendragon did not return calls from just-auto seeking comment.
On Monday afternoon, Lookers in a statement confirmed it had been “actively engaged” in discussions with the board of Reg Vardy about a possible cash offer.
“As part of these discussions, [Lookers] has made good progress in arranging finance for any such offer. Taking account of the announcement earlier today by Pendragon setting out a proposed offer for the shares of Reg Vardy at 800p per share, Lookers is continuing to progress discussions with potential funding providers. It believes that there would be no regulatory issues in relation to any offer it might make,” the statement said.
