20 June 2023

Lookers looks set to be bought by Canada’s Alpha Auto Group, via a UK entity called Global Auto Holdings, in a £465m deal.

The deal by the privately owned Canadian retailer network was first announced by Sky News and has been confirmed this morning.

It is an all-cash offer for Lookers by the bidding vehicle Global Auto Holdings Ltd – which is being called Bidco, and has the same beneficial owner as Alpha Auto – for the entire issued and to be issued share capital of Lookers.

Mark Raban, CEO Lookers

The offer price per share of 120p values the business at £465.4m. It is a 35.5% premium to the closing price of 88.7p yesterday (19 June 2023). Should the deal go ahead it is expected to be completed in late Q3 2023 or early Q4 2023.

Global Auto Holdings has secured letters of intent in favour of the deal from the Lookers directors and shareholders which have in total more than 42% of the company. The shareholders include Constellation, Lookers’ largest shareholder with more than 19% of the firm Artemis Investment, J O Hambro Capital and Schroder Investment Management.

Details of the letters of intent set out in the Stock Exchange announcement show that Schroder, which has a 4.1% share in Lookers, will withdraw its support if a third party offers at or above 110% of the AAG bid. 110% would be 132p a share. The note raises speculation that a bidding war could ensue for Lookers if another company came forward.

The Global Auto Holdings bid is a 48.3% premium to the average closing price for the previous 12 months. Hudson Sandler are representing Bidco in the transaction. MHA is supporting the deal.

Alpha Auto Group was founded in 2014 and has seven sites in the US and 10 in Canada. Its CEO is Kuldeep Billan.

Auto Retail Agenda understands the Alpha boss visited the UK last year to investigate the market.

Lookers trades from 147 franchised dealerships representing 35 brands in the UK and its history dates back to 1908.

In 2020, Pendragon approached lookers about a merger, but this was rejected in May 2020, due to its ongoing FCA investigation.

The wave of overseas interest in UK auto retailers reflects analysts’ belief that the sector is relatively cheap and likely to benefit from industry consolidation.

‘Greater scale for future growth’

Paul Van der Burgh, interim chairman of Lookers, said: “The significant financial and operational progress made by Lookers in recent years demonstrates Lookers’ ability to deliver excellent and sustainable value for our stakeholders.

“After a period of extensive engagement between the parties, the Offer represents an attractive opportunity for our shareholders to realise cash now for their investment at a significant premium to the prevailing share price.

“We have spent considerable time reviewing the potential impact of Bidco’s ownership on Lookers’ wider stakeholders and are confident that the commitments given by them will protect stakeholder interests.

“Bidco has clearly outlined its commitment to continue supporting our customers, operations, communities, and most importantly our talented and committed people.”

Mark Raban, CEO of Lookers, said: “Today’s offer reflects the transformational progress that has been made in recent years. We have harnessed our strong market position, enhanced our brand relationships, and executed well against our six strategic priorities.

“I am excited about the combination with Bidco. It will create a business of greater scale, and bring together two successful businesses with complementary OEM relationships, and a strong platform to support future growth in the UK.”

Kuldeep Billan, who is also Alpha Auto Group’s founder, said that the acquisition represented a “compelling opportunity to acquire one of the leading UK auto retail groups.

“With the UK auto retail market undergoing substantial change, including the adoption of new distribution models, we believe that the wider group is well positioned to navigate the current environment with geographically diversified operations and a focus on operational excellence.”

Tags: Alpha Auto, FCA, Lookers, Pendragon