20th Jun 2023 10:55
(Alliance News) - The news that car dealership group Lookers PLC is set to be acquired by a North American firm has investors considering whether there are any more potential takeover targets on the London Stock Exchange.
On Tuesday, Lookers said it has agreed to be bought out by Canadian motor dealer in a GBP465 million deal.
Alpha Auto Group Holdings LP, an operator of auto retail dealerships across North America, will pay 120 pence per Lookers share. Shares in Lookers jumped 34% to 118.52p each in London on Tuesday.
The board of Lookers said they believe the offer represents a "compelling proposition" for the firm's shareholders. It will unanimously recommend the offer at an upcoming court meeting and general meeting.
Lookers said it would benefit from a stronger platform in the UK, with a potential to expand internationally, develop a complementary original equipment manufacturer relationships, and garner expertise from Alpha Auto Group.
"Scale matters in this industry and operators are always looking for a way to plant more flags, be it locally or internationally," considered Russ Mould, investment director at AJ Bell.
"[The offer continues] a trend that has seen the UK-listed car retail sector shrink in recent years including successful bids for Marshall Motors and Cambria Automobiles as well as a failed one for Pendragon," he added.
In late 2021, Constellation Automotive took an interest in Cambridge-based automotive retailer Marshall Motor, ultimately taking it over, and delisting the firm from AIM last June. Cambria Automobiles left AIM in 2021, in a management buyout.
Over 2022, Nottinghamshire-based Pendragon PLC was courted by its largest shareholder Hedin Mobility. It also received an offer from what was later revealed to be US car dealership Lithia Motors, which was subsequently withdrawn.
Sweden-based mobility provider Hedin decided not to make a takeover offer in the end, citing challenging market conditions and an uncertain economic outlook as behind its change of heart
"Investors will be looking closely at Motorpoint in this regard as its shares last night hit a new all-time low of 102.75p, having lost 73% of its value since September 2021 thanks to a pullback in car prices, with the pains of higher interest rate costs and the cost-of-living pressures hurting demand for vehicles. Might it be the next company in the sector vulnerable to a bid?" AJ Bell's Mould asked.
Shares in Motorpoint Group PLC were up 0.2% in London on Tuesday, while Pendragon added 6.6%, and Vertu Motors PLC rose 5.1%.
By Elizabeth Winter, Alliance News senior markets reporter
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