4th May 2020 08:26
(Alliance News) - UK car dealership chain Pendragon PLC on Monday confirmed press reports that it has held discussions with peer Lookers PLC over a potential merger, but discussions have now been terminated.
Shares in Pendragon were 3.1% lower at 7.93 pence each in London, but Lookers was trading 1.2% higher at 24.03p.
"Pendragon remains well-positioned having already taken significant steps to reshape the business and to cut costs both in advance, and as a result, of the recent events which have temporarily curtailed business activity. And, as previously announced, Pendragon continues to benefit from the support of its stakeholders during the current disruption," it said in a short statement.
Over the weekend, Sky News reported that Pendragon had approached Lookers over the possibility of a tie-up, but Lookers had rebuffed its advances.
Lookers is in the midst of an investigation by the UK Financial Conduct Authority over fraudulent activity.
In April, Lookers had said that certain non-cash balance sheet accounts had not been fully reconciled in some operating divisions and, as a result, it would take a non-cash charge of GBP4 million in 2019 accounts. Despite this, Lookers had anticipated to report profitability for 2019 on an underlying basis.
The publication of the company's annual results has been delayed due to the investigation.
Pendragon, which owns the Evans Halshaw dealership, has been hit hard by the coronavirus outbreak, responding by cutting the pay of senior executives to preserve cash earlier in April. It also has furloughed over 80% of its UK staff for 21 days.
By Tapan Panchal; [email protected]
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