Cinch backs increased £504.2m takeover bid for Lookers

Cinch and other shareholders are backing the increased takeover offer from Global Auto Holdings for Lookers for £504.2 million.

In a statement to the market, Global Auto Holdings said Constellation Automotive, which owns Cinch and a 19.5% in Lookers, has sent “an irrevocable undertaking” to accept the revised takeover offer.

However, this announcement from Constellation still leaves the door open for other bidders to offer a higher value for Lookers “which equals or exceeds 110% of the increased offer price”.

Constellation Automotive had previously indicated that it would vote against Global Auto Holdings’ previous offer of £465.4m in July.

Due to the size of Constellation’s stake in Lookers, it meant that the bid was essentially blocked, which meant a higher offer needed to be tabled to get the deal over the line.

Other shareholders like Artemis Investment Management, which owns 10.6% of Lookers, and J O Hambro Capital Management, which owns a 3.1% stake, have also sent letters of intent to accept the revised £504.2m offer.

A total of 50% of Lookers' shareholders need to accept the new offer in order for the takeover to go ahead.

Global Auto Holding has a maximum of 28 days to publish an offer document and there will then be a period of 60 days for consideration of the offer from the date of publication.

David Kendrick, UHY Hacker Young Manchester chief executive (pictured), told AM: “It appears the Lookers deal will now proceed with the offer now meeting the suggested price that Constellation released.

“The deal still looks incredible value for what is one of the leading groups in the UK.

“There is plenty of change afoot with Lithia clearly on the expansion trail, Hedin growing and Pendragon remaining a potential target for someone.

“Never have we seen so many international businesses circling the UK motor trade so it certainly appears more change is likely to come later this year and into 2024.”

Who is AAG?

AAG has 15 large scale dealership operations across Canada and the US and said its potential acquisition of Lookers is part of its plans to become a global automotive retailer.

AAG said it recognises the strength and importance of Lookers’ relationships with its OEM partners and it expects to build on these, allowing partners to benefit from AAG's "desire and capacity to invest in its facilities, be a proactive partner with respect to changes in the operating model (including the transition agency models by several OEMs) and to be a willing acquirer to grow its dealership site base to help its OEM partners achieve their respective goals".

Kuldeep Billan, founder and executive chairman of AAG, has previously said: “The proposed acquisition of Lookers represents a compelling opportunity to acquire one of the leading UK auto retail groups while partnering with fantastic OEM brands  and Lookers’ approximately 6,500 strong team members.

“We look forward to further  building upon Lookers’ strong original equipment manufacturer (OEM) relationships by being a trusted and reliable retail  partner while delivering strong volumes and a high level of customer experience across  a range of OEM ‘go to market’ strategies.