21st Apr 2006 15:29
Lookers PLC21 April 2006 21 April 2006 Lookers plc Response to Pendragon ("Pendragon PLC") Announcement The Board of Lookers notes the announcement by Pendragon earlier today. In theopinion of the Lookers board, this statement by Sir Nigel Rudd remains totallyunconvincing in his arguments in favour of Pendragon's inadequate proposal. Once more, Pendragon failed: • to substantiate how Lookers shareholders would benefit from becoming part of a lower growth business like Pendragon; and • why Lookers shareholders should contemplate a transaction that could be significantly earnings dilutive for them. Pendragon continues to: • cite selective and crude premia comparisons that your Board considers to be misleading and irrelevant; and • attempt to mislead Lookers shareholders that they would get the same deal as it offered to Vardy shareholders. Your Board believes that it has conclusively demonstrated that the terms are worse. Moreover, Pendragon appears to have acknowledged that there is a risk that somemanufacturers will refuse to trade with Pendragon and therefore that there is areal risk that revenues will be lost. Pendragon also acknowledges that it will only be protected by EU rules where italready has a franchise of a particular brand. Your Board would add thatPendragon does not operate six of the seven brands that Lookers has indicatedthat it considers to be at risk. Profit forecast Pendragon has questioned the deliverability of Lookers profit forecast. Lookersboard draws your attention to the following: • Pendragon makes no reference to Lookers 2006 Q1 statement (adjusted PBT up 90%); • in 2006 Q1, Lookers delivered 43% of the full year profit forecast; • the 2006 Q1 trading statement and profit forecast have both been reported on by PricewaterhouseCoopers LLP and reviewed by Lookers financial adviser NM Rothschild & Sons Limited Also, Pendragon has chosen to rely on outdated brokers forecasts for Lookers themajority of which were last updated more than two months ago prior to Lookerspreliminary results and prior to Lookers Q1 trading update. This is anotherdeliberate attempt by Pendragon to mislead Lookers shareholders and isillustrative of its questionable tactics. Lookers performance Lookers continues to outperform its peers and has exceptional growth prospectsas an independent company. • Lookers 2005 adjusted operating profit up 31% on 2004• Lookers 2005 adjusted PBT up 28% on 2004 • Lookers 2005 adjusted eps up 22% on 2004 • Lookers Q1 2006 adjusted operating profit up 71% on the same period in 2005• Lookers Q1 2006 adjusted PBT up 90% on the same period in 2005 • Lookers 2006 forecast adjusted PBT up 39% on 2005 • Lookers 2006 forecast adjusted eps up 30% on 2005 • Pendragon 2005 forecast adjusted eps up just 11% on 2004 • Pendragon 2006 forecast adjusted eps up just 15% on 2005 Pendragon's growth rates are significantly lower than those of Lookers. Recommendation Shareholders should reject Pendragon's offer which the Board believes is neither"full" nor "fair". Ken Surgenor, Chief Executive said: "Our results for the important first quarter demonstrate that we areoutperforming the market with a proven strategy and underpin the profit forecastfor 2006. Pendragon has completely failed to address the important concerns wehave raised. Its offer significantly undervalues Lookers and comes withsignificant risks." Responsibility The Directors of Lookers accept responsibility for the information contained inthis document, except that the only responsibility accepted by them in respectof the information contained in this document relating to Pendragon, itssubsidiary undertakings and the Directors of Pendragon which has been compiledfrom published sources, is to ensure that such information has been correctlyand fairly reproduced and presented. To the best of the knowledge and belief ofthe Directors (who have taken all reasonable care to ensure that such is thecase) the information contained in this document is in accordance with the factsand does not omit anything likely to affect the import of such information. Enquiries: Ken SurgenorDavid DysonLookers plc 0161 291 0043 Richard BaileyAndrew ThomasN M Rothschild & Sons Limited 0161 827 3800 Andrew HayesNick LyonJames HillHudson Sandler 020 7796 4133 Christopher WilkinsonNumis Securities 020 7776 1530 N M Rothschild & Sons Limited ("Rothschild"), which is authorised and regulatedby the Financial Services Authority in the United Kingdom, is acting for Lookersin connection with the Offer and no one else and will not be responsible toanyone other than Lookers for providing the protections offered to clients of NM Rothschild & Sons Limited nor for providing advice in relation to the Offer. This announcement contains statements that are or may be forward-looking withrespect to the financial condition, results of operations and businesses ofLookers. These forward-looking statements include risk and uncertainty becausethey relate to events and depend on circumstances that will occur in the future.There are a number of factors which could cause or may cause actual results ordevelopments to differ materially from those expressed or implied by suchforward-looking statements. Dealing Disclosure Requirements Under the provisions of Rule 8.3 of the City Code on Takeovers and Mergers (the"Code"), if any person is, or becomes, "interested" (directly or indirectly) in1% or more of any class of "relevant securities" of Lookers or Pendragon, all "dealings" in any "relevant securities" of that company (including by means of anoption in respect of, or a derivative referenced to, any such "relevantsecurities") must be publicly disclosed by no later than 3:30pm (London time) onthe London business day following the date of the relevant transaction. Thisrequirement will continue until the date on which the offer becomes, or isdeclared, unconditional as to acceptances, lapses or is otherwise withdrawn oron which the "offer period" otherwise ends. If two or more persons act togetherpursuant to an agreement or understanding, whether formal or informal, toacquire an "interest" in "relevant securities" of Lookers or Pendragon, theywill be deemed to be a single person for the purpose of Rule 8.3. Under the provisions of Rule 8.1 of the Code, all "dealings" in "relevantsecurities" of Lookers or Pendragon by Lookers or Pendragon, or by any of theirrespective "associates", must be disclosed by no later than 12:00 noon (Londontime) on the London business day following the date of the relevant transaction. A disclosure table, giving details of the companies in whose "relevantsecurities" "dealings" should be disclosed, and the number of such securities inissue, can be found on the Takeover Panel's website atwww.thetakeoverpanel.org.uk. "Interests in securities" arise, in summary, when a person has long economicexposure, whether conditional or absolute, to changes in the price ofsecurities. In particular, a person will be treated as having an "interest" byvirtue of the ownership or control of securities, or by the virtue of any optionin respect of, or derivative referenced to, securities. Terms in quotation marks are defined in the Code, which can also be found on thePanel's website. If you are in any doubt as to whether or not you are requiredto disclose a "dealing" under Rule 8, you should consult the Panel. Sources and bases The definitions, bases of calculations and sources of information are the sameas those contained in Appendix 6 of the Circular issued to Lookers shareholderson 19 April 2006 with the exception of the references to the consensus forecastearnings per share for Lookers and the brokers forecasts which form part of thatconsensus which is sourced from Hemscott Group Limited, and the statement thatLookers has delivered 43% of its full year profit forecast which is based uponthe £11.0 million profit contained in Lookers first quarter trading updatedivided by £25.1 million contained in the full year profit forecast, sourcedfrom Appendices 1 and 2 of the Lookers defence document respectively. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
LOOK.LPDG.L