Consortium’s offer valued Lookers at £270m

THE consortium led by Jack Petchey which was bidding for Manchester-based Lookers only submitted an offer of £270m for the business – or 70p a share.

The offer was 10p below the indicative 80p offer which led to Lookers’ management to open their books to the consortium, which consisted of Petchey’s firm Trefick, Moor Park Capital Partners and an investment vehicle owned by Brett Palos.

Lookers said that the consortium’s interest was based on an assumption that its property portfolio was significantly undervalued.

A subsequent due diligence exercise revealed that its properties were indeed undervalued, “but not to the extent required by the consortium’s business plan”.

In a trading statement, Lookers’ management said the consortium also found that the company’s pension liabilities would have increased had the takeover plan been successful.

“Whilst both of these factors may have influenced the consortium’s valuation of the company, neither of these factors change the value of the assets and liabilities which are included in the accounts of the company and do not reduce the net assets of the company.”

Lookers also said that the strong growth which took place in the first quarter of the year had been replicated in the second quarter, with its Sheffield-based parts division continuing to achieve record results. However, new car sales remain difficult, with new UK car sales 18% lower than the first half of last year when the scrappage scheme was in place.

Lookers said that its own car sales division had been impacted by weaker consumer confidence, but added that the improved performance of its parts division should mean that its sales for the first six months of 2011 will be “very close” to last year’s record trading performance.

During the period, it sold or closed five underperforming outlets but opened three new ones.

The sales helped to realise £12m, and the firm said its overall net debt is lower than forecasted.

“We therefore have a significant amount of unutilised bank facilities which provide improved financial security for the group.

“Our current bank facilities expire in April 2012 and we have commenced refinancing discussions with our banks, the initial results of which are encouraging.”