27th Jan 2006 07:01
Pendragon PLC27 January 2006 Not for release, publication or distribution, in whole or part, in, into or from the United States, Canada, Australia or Japan. For immediate release 27 January 2006 Pendragon PLC ("Pendragon") Possible Offer for Lookers plc ("Lookers")and Statement Regarding Pendragon's Call Option over Reg Vardy plc ("Reg Vardy") Shares Possible Offer for Lookers Pendragon announces that it has made two formal approaches to the Board ofLookers to discuss the terms of a possible three-way consolidation of Lookers,Reg Vardy and Pendragon, to be effected through the existing cash offer byPendragon for Reg Vardy at a price of 800 pence per Reg Vardy share and a shareexchange offer by Pendragon for the entire issued share capital of Lookers. On 14 December 2005, at Pendragon's request, a meeting took place betweenPendragon and Lookers. Following that meeting, on 21 December 2005, Pendragonmade an initial indicative offer (the "Initial Proposed Offer") to acquire theentire issued share capital of Lookers by way of a share exchange offer. Theexchange ratio in the Initial Proposed Offer was one new Pendragon share foreach Lookers share. The Initial Proposed Offer was rejected by the Board ofLookers on the basis that it "very substantially undervalue(d) the Company". On 12 January 2006, Pendragon made a revised indicative offer to Lookers (the "Revised Proposed Offer"). The exchange ratio in the Revised Proposed Offer was1.15 new Pendragon shares for each Lookers share. Based on the closing shareprices of Lookers and Pendragon on the business day prior to the RevisedProposed Offer being made, the Revised Proposed Offer valued each Lookers shareat 600 pence, a 26.9 per cent. premium to the Lookers share price at that timeand a premium of 44.3 per cent. to the closing Lookers share price of 415.5pence on 15 November 2005, the day prior to Reg Vardy's announcement that it hadreceived an approach from Pendragon in relation to a possible offer. Lookers responded to the Revised Proposed Offer in a letter to Pendragon dated16 January 2006. At that time, Lookers stated that its Board was not prepared toenter into discussions relating to the Revised Proposed Offer. In light of the announcement by Lookers on 17 January 2006 of its proposedacquisition of Reg Vardy, Pendragon is making this announcement in order toallow it freely to discuss the Revised Proposed Offer with Lookers shareholders. Pendragon believes that the synergies available from a three-way combination ofLookers, Reg Vardy and Pendragon should be considerable and, through a shareexchange offer, Lookers shareholders would benefit from the proven track recordof Pendragon management of integrating large acquisitions and extractingsynergies. Pendragon is confident that it has the management experiencenecessary to integrate the businesses of both Reg Vardy and Lookerssimultaneously and successfully. Such a combination would also allow Lookers shareholders to exchange theirexisting holdings for shares in an enlarged group which would be bothwell-capitalised and the clear industry leader. Pendragon believes that the earnings of an enlarged Pendragon group followingthe acquisitions of Reg Vardy and Lookers, before synergies, would beimmediately enhanced compared with the earnings of Pendragon on a stand-alonebasis (although this statement should not be interpreted to mean that theearnings per share of such an enlarged Pendragon group would necessarily begreater than or equal to those of prior years). The Revised Proposed Offer was subject to certain pre-conditions, including,inter alia,: (i) Lookers' proposed acquisition of Reg Vardy not proceeding; (ii)Pendragon being permitted access to Lookers to undertake a limited due diligenceexercise and (iii) the Board of Lookers recommending the terms of the RevisedProposed Offer. Pendragon reserves the right to waive any of thesepre-conditions. This announcement does not represent a firm intention to make an offer toacquire the entire issued share capital of Lookers and, accordingly, there canbe no certainty that any offer to acquire the entire issued share capital ofLookers will be made, even if the above pre-conditions are satisfied or waived. Statement Regarding Reg Vardy Call Option and Voting Intention Lookers' proposed acquisition of Reg Vardy is conditional upon, inter alia, theapproval of Reg Vardy shareholders at a Court Meeting and at an ExtraordinaryGeneral Meeting (together the "Reg Vardy Shareholder Meetings"). In order forthe required resolution(s) to be passed, Reg Vardy shareholders representing atleast 75 per cent. by value of those present in person or by proxy must vote infavour. As previously announced, Pendragon has entered into an arrangement with SirPeter Vardy which allows it to acquire, at its option, 9,348,111 Reg Vardyshares, representing 16.6 per cent. of the existing issued share capital of RegVardy, at a price of 800 pence per Reg Vardy share (the "Call Option").Pendragon currently intends, prior to the Reg Vardy Shareholder Meetings, toexercise its rights under the Call Option and vote against the acquisition ofReg Vardy by Lookers. As a consequence of entering into irrevocable undertakings in favour ofPendragon in connection with its existing cash offer for Reg Vardy, certain RegVardy shareholders, including Reg Vardy Directors and persons connected withthem, are prevented from voting at any shareholder meeting to approve theproposed acquisition of Reg Vardy by Lookers. Therefore, if the Call Option isexercised, a total of 5,942,906 Reg Vardy shares would be prevented from votingin favour of the proposed acquisition of Reg Vardy by Lookers. The Reg Vardy shares held under the Call Option represent 18.6 per cent. of theReg Vardy shares that are able to vote at the Reg Vardy Shareholder Meetings.Accordingly, on the basis of the current issued share capital, if a further3,229,388 Reg Vardy shares, representing 6.4 per cent. of the Reg Vardy sharesable to vote at the meetings (being 5.7 per cent. of the total Reg Vardy issuedshare capital), were voted against the relevant resolutions in addition to theshares subject to the Call Option, Lookers' proposed acquisition of Reg Vardywould fail. * * * * * There will be a meeting for analysts at 9.30 a.m. today at the offices ofFinsbury Group, Tenter House, 45 Moorfields, London EC2Y 9AE. Enquiries: Pendragon PLCTrevor Finn, Chief ExecutiveDavid Forsyth, Finance DirectorTelephone: 01623 725 114 Citigroup Global Markets Limited(Financial adviser and corporate broker to Pendragon)Philip Robert-TissotSam SmallChris Zeal (Corporate Broking)Telephone: 020 7986 4000 Finsbury Group(Public relations adviser to Pendragon)Rupert YoungerGordon SimpsonTelephone: 020 7251 3801 Citigroup Global Markets Limited, which is authorised and regulated in theUnited Kingdom by the Financial Services Authority, is acting exclusively forPendragon and for no one else in connection with the matters discussed in thisannouncement and will not be responsible to any other person for providing theprotections afforded to clients of Citigroup Global Markets Limited or forproviding advice in relation to the matters discussed in this announcement. Dealing disclosure requirements Under the provisions of Rule 8.3 of the City Code, if any person is, or becomes,"interested" (directly or indirectly) in 1% or more of any class of "relevantsecurities" of Pendragon or of Lookers or of Reg Vardy, all "dealings" in any "relevant securities" of that company (including by means of an option in respectof, or a derivative referenced to, any such "relevant securities") must bepublicly disclosed by no later than 3.30pm (London time) on the London businessday following the date of the relevant transaction. This requirement willcontinue until the date on which the relevant offer becomes, or is declared,unconditional as to acceptances, lapses or is otherwise withdrawn or on whichthe relevant "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 Pendragon, Lookers or RegVardy, they will 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 Pendragon or of Lookers by Pendragon or Lookers, or by any oftheir respective "associates", must be disclosed by no later than 12.00 noon(London time) on the London business day following the date of the relevanttransaction. Under the provisions of Rule 8.1 of the Code, all "dealings" in "relevantsecurities" of Reg Vardy by Pendragon or Reg Vardy, 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 "relevant securities" "dealings" should be disclosed, and the number of such securities in issue,can be found on the Takeover Panel's website at www.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 virtue of any option inrespect 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. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
PDG.LLOOK.L