Lookers has entered into a conditional agreement to acquire seven-site Warwick Holdings, trading as Drayton Group, for £55.4m.

The acquisition is being funded from existing bank facilities through a conditional contract, with the condition being the successful conclusion of the recent sale of Lookers’ parts division, which is expected to complete by the end of October.

Drayton Group is a Mercedes-Benz and Smart specialist. It has seven locations in Stoke on Trent, Stafford, Shrewsbury, Wolverhampton, Walsall, Stourbridge and Worcester. The new group will join Lookers' existing seven site Mercedes portfolio in the south of England.

The statutory accounts for Drayton Group for the year ended December 31, 2015 reported turnover of £276m and profit before tax of £5.2m.  The company had gross assets of £84.2m and net assets of £22m.

Lookers expects the acquisition to be earnings enhancing for the year ending December 31, 2017.

Andy Bruce, chief executive of Lookers, said: “We are looking to accelerate growth and today's announcement shows we are putting the proceeds from the proposed disposal of the parts division to work as quickly as possible.

“We look forward to welcoming the Drayton team to the Lookers Group as it will enable us to increase our growth by adding value through excellent execution and targeted acquisitions. This acquisition will also help to build the company's presence in the Midlands.

“I have been very impressed with the quality of Drayton Group's business, outstanding customer service and commitment to employee satisfaction. These qualities complement Lookers culture and will allow us to advance our strategy of having the right brands, in the right locations in order to take advantage of further growth opportunities."

UHY Hacker Young advised Drayton Group on the disposal.

David Kendrick, head of UHY’s National Automotive Group, said: “The Drayton Mercedes-Benz business is regarded as one of the premier prestige groups in the UK.

"Having known the shareholders for some time it was fantastic to deliver a deal for them that gave them a clean exit and also an acquirer in Lookers that has very similar values and culture.

"The Lookers team will no doubt develop the business further in the future and this purchase takes their number of Mercedes market areas to two. The demand for premium brand businesses certainly continues to increase and we have no doubt there will be further consolidation and perhaps some new international entrants into the UK market over the coming months.”