The bid by Pendragon, Britain’s biggest car dealer, to acquire rival Lookers took a dramatic turn on Tuesday when Tony Bramall, who sold the CD Bramall chain to Pendragon two years ago, became the biggest shareholder in Lookers and pledged to help it remain independent.
Mr Bramall’s acquisition of a 24.4 per cent stake in Lookers comes ahead of tomorrow’s deadline for Lookers investors to decide whether to support Pendragon’s offer.
Lookers will offer Mr Bramall, one of the best-known figures in British car retailing, a board seat if it fends off Pendragon’s bid.
Mr Bramall said: “I regard this as a very good investment for the family in a well-run group where there is substantial scope for growth and I look forward to working with my new board colleagues to achieve this objective.
“Obviously I will not be accepting the existing Pendragon offer in relation to the above holding.”
Yorkshire-based Mr Bramall sold his first business to Avis in 1987. He went on to found CD Bramall and built it into the second largest listed car dealer, with annual sales of £1.8bn, before Pendragon paid £230m for the business in 2004.
That deal cemented Pendragon’s leadership in the UK car market – extended this year when Pendragon bought Reg Vardy, also a target for Lookers. Pendragon said its bid for Lookers offered the advantages of a three-way consolidation.
Pendragon is seeking the support of investors holding a simple majority of Lookers shares, meaning that Mr Bramall’s stake is not of itself decisive. Pendragon said: “In our eyes, it changes nothing.” However analysts believe Mr Bramall’s entry into the Lookers camp makes it more likely investors will reject Pendragon’s offer.
Robert Brent, of KBC Peel Hunt, said: “It is very good PR for Lookers just before the bid closes. It secures 24.4 per cent and it sends a strong signal for the company that Tony Bramall has invested this much money. It is also good news for the sector that Tony Bramall has got back in.”
Lookers said: “We are delighted that one of the most respected and successful operators in the UK motor retail industry has chosen to make this investment in Lookers’ exciting growth prospects.”
Pendragon said that Hamilton Finance, the GE subsidiary that sold its Lookers stake to Mr Bramall for 635p a share, had sold at a “sizeable discount” to the value of Pendragon’s offer. It said Lookers shareholders should question the value attached to Lookers by its board.
Pendragon is offering 1.15 of its shares for each Lookers share. Shares in Lookers closed down 5p at 668p while Pendragon was down 5p at 594p.
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