Lookers takeover set to collapse as Cinch withdraws backing

Global Auto Holdings’ £465.4 million bid to acquire Lookers may be in doubt as shareholder Constellation Automotive has announced it will vote against the deal.

Constellation, through its Cinch Holdco UK business, is the largest shareholder in Lookers with a 19.52% stake and has now withdrawn its letter of intent. 

Lookers is now “re-engaging with other shareholders” and believes a total of 25% of voting rights of the dealer group will vote against the Global Auto Holdings offer.

Shareholders have until July 25 to vote by proxy on the deal or they must attend the general meeting in Salford on July 27.

When the takeover bid, of 120p per share, by Global Auto Holdings was announced last month the Lookers board said they backed it and they had received the backing of shareholders holding 36% of all shares.

This had already reduced to 30% as investors such as Schroders have sold off millions of shares in the interim, while the share price hovered at around 119p per share, reflecting the bid offer.

Today, since Lookers announcement of Cinch's plan to vote against its sale, the share price dropped as low as 101p - still above the 89p share price before Global's offer was revealed.

Now if Lookers can’t find a resolution with shareholders, it said it expects it will remain "an independent listed company”.

Lookers said “a further announcement will be made in due course, as appropriate”.

Global Auto Holdings is a sister company of Canada's Alpha Auto Group Holdings (AAG) and the business made the offer for Lookers in June as part of its plans to become a global automotive retailer.

Mark Raban, Lookers chief executive said at the time that the offer would create a business of greater scale to create a platform for future growth in the UK.

Paul Van der Burgh, interim chairman of Lookers, said the business had spent considerable time reviewing the potential impact of AAG’s ownership.

He said Lookers' has made "significant financial and operational progress in recent years: "We’re confident that the commitments given by AAG will protect stakeholder interests. 

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

David Kendrick, UHY Hacker Young Manchester chief executive, told AM it does look like "the deal could be off".

He said: "The share price has dropped 10% and rumours are that Lookers no longer has enough votes to secure a deal.

"It wouldn’t surprise me in the slightest as the price looked very good value for the buyer and maybe on review it’s deemed under market value.

"It's possible there may be a rival bid, but who knows, things are moving very quickly."