A transatlantic bid for London-listed car dealership lookers breathed new life into London’s lacklustre dealmaking scene today.
The £464 million swoop for the 150-forecourt stock market stalwart came from Canada’s Alpha Auto Group and was backed by Lookers board, which called it “fair and reasonable”.
Priced at 120p per share, it offered investors a hefty 35% premium compared with Monday’s closing price. Lookers stock headed toward the offer price, up 30p to 119p.
The deal will end a long spell for the Mancunian firm on the London market. It first listed in 1973 and was founded in 1908 selling bicycle parts before it moved into used cars. It now lists 7,000 vehicles from 34 manufacturers.
Lookers has been seen as a potential takeover target for some time. It was the subject of an inquiry by the Financial Reporting Council in 2019, when its shares were suspended before it eventually reported a £45 million loss for the year, just before the pandemic hit car sales.
It was then approached by rival dealership Pendragon, but resisted the bid, and there has been speculation of further offers for the Manchester-based company ever since, as part of expected dealmaking in the industry.
According to City experts, dealerships look like good value after their valuations took a hit during Covid and have taken time to rebound even as the used car market recovers strongly.
Victoria Scholar, head of investment, Interactive Investor said AAG’s offer was “irrefusable”, adding: “Lookers is in a strong position financially, having raised its 2023 profit forecast in April, partly thanks to higher average selling prices for new vehicles.”
The move will stoke hopes for a wider return to dealmaking, after a desolate start to the year for mergers and acquisitions, one of the main engines for banks’ revenue in the Square Mile.
In 2023, M&A got off to its slowest start for a decade, with the value of deals down 60% year-on-year to £38 billion according to data from market tracker Refinitive. There were only just over 1,200 deals involving UK companies during the quarter, the lowest since 2017.
Lookers was advised by Numis and Peel Hunt.
