Canadian giant Alpha Auto Group plunges into leading UK car dealership Lookers in £465m cash deal – at a 35% premium to share price
- 120p per share deal is at a 35.3% premium to Lookers’ closing price on Friday
- Alpha Auto says Lookers is an ‘attractive opportunity’ to enter the UK
- Lookers executives are recommending that shareholders support the deal at the general meeting
Lookers has agreed to be acquired by Canadian car dealer group Alpha Auto in an all-cash deal that values the UK company at £465.4 million.
At 120 pence per share, the deal represents a 35.3 percent premium to Lookers’ closing price of 88.7 pence on Friday and a 48.3 percent premium to its volume-weighted average price over the past 12 months. months.
Lookers bosses have unanimously recommended that shareholders vote in favor of the deal, which the chairman says will “protect the interests of stakeholders” while supporting “our customers, operations, communities” and staff.
Lookers shares rose 33.9 percent in early trading to 118.8 pence, bringing its 2023 profit to 51.6 percent.
Analysts had expected consolidation in the car dealership sector
Alpha Auto, privately owned and based in Toronto, operates 15 large-scale new car dealerships in Canada and the US.
Alpha Auto says the deal represents an ‘attractive opportunity’ to enter the UK market through ‘one of the UK’s leading integrated automotive retail and service groups with significant competitive advantages’.
The group will also benefit from Lookers’ relationships with Original Equipment Manufacturer (OEM) partners in the UK and Ireland, it said.
The expanded group will also have “additional balance sheet capacity and access to capital,” thanks to its larger size and ability to generate cash flow.
This, it says, will help fund further growth in the UK and beyond.
Lookers has grown strongly in recent years, generating an operating profit of £109 million in 2022, compared to £71 million in 2018.
Altrincham-based Lookers said Alpha Auto’s offer “is an attractive opportunity” for shareholders to accelerate and mitigate this value creation opportunity and achieve an immediate cash exit for their investment at a significant premium to prevailing market conditions. stock price’.
It added that shareholders should also consider the “inherent cyclicality in the auto retail market” [and] a significant ongoing structural transformation to electric vehicles’.
This comes on top of other factors “such as inflation, macroeconomic uncertainty, development of overseas supply chains and structural changes in the distribution model, which create uncertainty for medium-term market prospects.”
Alpha Auto, represented by bidding company Global Auto Holdings, has already received the backing of Lookers investors representing 160,655,505 shares and 42.1 percent of the issued share capital.
Subject to regulatory approval and the required number of remaining Lookers shareholders voting in favor, the deal is expected to close in the third or fourth quarter of this year.
Lookers Interim Chairman Paul Van der Burgh said: “The significant financial and operational progress Lookers has made over the past few years demonstrates Lookers’ ability to deliver outstanding and sustainable value to our stakeholders.
“Following a period of extensive involvement between the parties, the Offer presents an attractive opportunity for our shareholders to monetize their investment now at a significant premium to the prevailing share price.”
Lookers CEO Mark Raban added: “We capitalized on our strong market position, enhanced our brand relationships and performed well based on our six strategic priorities.
‘[The deal] will create a larger scale business, bringing together two successful companies with complementary OEM relationships and a strong platform to support future growth in the UK.”