27 July 2023

Canada’s Alpha Auto, through its UK entity Global Auto Holdings, has increased its takeover offer for Lookers to 130p a share.

Global Auto Holdings, referred to as Bidco, has also announced that the increased offer will switch to a takeover offer for Lookers.

Today’s takeover offer differs from the original scheme offer in the way voting for the offer is counted. Under the original court sanctioned scheme, Alpha would have needed 75% of those who voted (planned for today) to succeed.

The new takeover bid of 130p a share requires 75% of all shareholders to agree for it to go ahead. However, this percentage could be lowered to 50% at a later date.

With Constellation holding more than 19% of Lookers (and stating that it would vote against the 120p a share offer), the new approach could be a way to get round this issue.

The 130p cash offer for Lookers’ entire issued share capital values the business at £504.2m.

It is an 8.3% increase on Bidco’s previous offer (120p a share), and a 60.6% premium on Lookers’ weighted average over the past 12 months.

Lookers closed yesterday (26 July) at 97p a share.

Bidco has agreed the terms with the board of Lookers.

Because the offer has switched to a takeover, Lookers has proposed to adjourn a meeting where shareholders were to vote on the deal due to take place today (27 July 2023). The new offer also does not say that it is ‘final’, which means Alpha Auto could increase the bid if necessary.

The offer document will be published within 28 days and ‘Day 60’ of the takeover code will then be enacted.

Auto Retail Agenda also understands that US retailer Lithia had been working on a bid for Lookers. However, under the Takeover Code, governed by the Takeover Panel, it is highly likely Lithia would have been asked if it was considering making a bid for Lookers. Legally Lithia would have had to either declare that is was or was not planning a bid or that it had shelved an offer under what is known as ‘pens down’, a term that means Lithia will not now make a bid for several months.

Lookers Alpha Auto timeline

20 June: Deal announced for Lookers to be bought by Canada’s Alpha Auto in a £465m deal. It was an all-cash offer for the entire issued and to be issued share capital.

20 July: Lookers takeover in doubt after Constellation withdraws support for Alpha Auto’s bid. Constellation has a 19.2% stake in Lookers.

27 July: Bidco ups Lookers offer to 130p a share, switches to a takeover offer.

Tags: Alpha Auto, Constellation, Lithia, Lookers