LONDON - Britain's largest car dealer Pendragon Plc said on Friday it was buying rival CD Bramall Plc for an agreed 230 million pounds ($425 million), boosting its position at the luxury end of the market.
"The strategy for Pendragon is to be bigger with a few manufacturers. This achieves that objective in that we strengthen our position with the premium brands of Jaguar, Land Rover, BMW and Mercedes," said Chief Executive Trevor Finn.
Pendragon shares soared on the news, valuing the company at 335 million pounds.
The deal is worth 600 pence per CD Bramall share, a 24 percent premium to the closing price on Jan. 14, the day before CD Bramall said it had received a takeover approach.
Finn said CD Brammall, whose brand name will survive, would also strengthen Pendragon's position in the high volume sector.
"Recent changes to retailers' franchise agreements are likely to drive further consolidation in the industry, and through this transaction we are confirming our position as the number one motor car retailer in the UK," he said.
Finn said there was a good geographic and franchise match between the two companies, and integration should not involve a huge amount of work or change, and he would consider bolt-on acquisitions while operations are being merged.
For its part, CD Bramall said: "We believe that our industry will continue to be subject to restructuring and that groups of a substantial size will be able to take commanding positions in the industry over the next few years."
Pendragon also said in its statement that its 2003 profit before tax, exceptional items and goodwill should be at least 37 million pounds. In August, it reported pre-tax profit rose 53 percent to 23.7 million pounds in the six months to end-June, on turnover down 5 percent to 948 million pounds.