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Could Lookers acquisition fall foul of Takeover Panel rules after wave of redundancies?

  • Bidders for public companies must lay out their intentions for post sale changes clearly in offer documents
  • Takeover Panel can investigate if changes differ to those laid out to shareholders in advance of sale
  • Lookers and Takeover Panel both refuse to comment on whether there is potential for investigation
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Time 7:08 am, December 18, 2023

Car dealer group Lookers may fall foul of takeover rules after the bid to take it private appears to have not detailed the extent of redundancies that would be made post sale.

Global Auto Holdings – the bidding vehicle of Canadian firm Alpha Auto Group – issued its bid for Lookers on June 20 via a ‘Rule 2.7 Announcement’ on the London Stock Exchange.

The rules on what must be disclosed in these speculative offer documents are strict and governed by the Takeover Panel, an independent body designed to administer the Takeover Code and supervise deals. 


In these documents, which shareholders and the board use to decide on whether to accept the deal, the bidder’s future intentions for the firm must be clearly laid out.

While Global Auto Holdings does explain that post acquisition the Lookers head office functions relating to its position as a public limited company would no longer be needed, it does not mention the significant redundancies that have been announced since it went private.

So far, around 1,000 Lookers staff are at risk of losing their jobs, with roles being cut from sales teams, including business managers and servicing departments in the group’s 160 sites across the UK. Even Christmas parties at the group have been cancelled.


CEO Mark Raban has also announced he will be stepping down at the end of the year.

Lookers has confirmed to Car Dealer that staff are currently being consulted on the redundancies and has admitted that as much as 10% of its workforce could lose their jobs.

Lookers was acquired in a £504.2m deal funded by three Canadian banks. The money has been lent at crippling interest rates and will need to be refinanced within a year.

The Takeover Panel has the ability to investigate the information revealed in a 2.7 announcement and, if it is not satisfied enough details about changes post sale have been included, can apply sanctions. These can range from a private reprimand to a public announcement on its findings.

Car Dealer contacted The Takeover Panel, but it said it does not comment publicly on its investigations, or whether they are live or not. It said private reprimands are just that, and not made public.

It could not comment either on whether there was an active investigation into the Lookers takeover or not.

Lookers refused to provide a comment when contacted by Car Dealer. 

In the original Rule 2.7 Announcement made to investors on June 20, Global Auto Holdings (Bidco) made reference to the importance that it placed on the current Lookers teams employed by the car dealer group.

It said: ‘Bidco attaches great importance and value to the skills, experience and commitment of the existing management and employees of Lookers and believes that they will be a key factor in maximising the success and growth of the business going forward. 


‘Bidco has no intention to make any changes to the conditions of employment or the balance of the skills and functions of Lookers employees or management.

‘There may be some restructuring required following the effective date. In particular, once Lookers ceases to be a listed company, certain corporate and support functions relating to Lookers’ status as a listed company are likely to see reduced headcount.

‘Bidco’s intention is for the Lookers business to continue uninterrupted, providing an opportunity for accelerated growth in the UK market. 

‘Other than as described, Bidco has no intention of effecting any material change to Lookers’ strategic plans, operations or location of the business.’

In the same document, Lookers directors said they ‘welcomed the intentions’, especially ‘the importance placed on the existing management and employees of Lookers and their key roles in the business going forward’.

A salesperson who works for Lookers told Car Dealer this week the news of job cuts had devastated colleagues across the group.

‘The redundancies are worse than everyone thought,’ they said. ‘We were all promised no changes would happen [following the sale] but all sites have now been told no business managers and sales teams to be smashed in half.’

The Rule 2.7 document explains that the new Lookers owners planned to carry out a ‘strategic review’ within 12 months of the date of sale with a number of objectives.

These include ‘reviewing the organisation’s structure, strategy, dealership portfolio, freehold estate and agreements with vehicle manufacturers’.

There appears to be no mention in the document, though, of the widescale redundancies that have been announced since Global Auto Holdings took over the business on October 9.

Car Dealer asked Lookers why the redundancies weren’t mentioned in the intentions section of the offer and what had changed post sale that required such material moves on the staffing levels. It again declined to comment.

In 2010, US food giant Kraft was censured by the Takeover Panel for breaking promises it made during its purchase of Cadbury.

The decision was based on Kraft’s promise in official stock market announcements that the UK would be a ‘net beneficiary in terms of jobs’ and that if it took over Cadbury it would continue to operate its Somerdale factory.

The £11.6bn takeover went through, but a week later Kraft said it could not keep the factory open.

The panel said that while it accepted Kraft had an ‘honest and genuine belief’ it could keep the factory open, it concluded that the firm should have sought more detailed information from Cadbury.

Experts at legal firm Herbert Smith Freehills wrote in an article about bidder intention statements that the UK Takeover Code requires post-offer intention statements to be both ‘an accurate statement of that party’s intention at the time the statement is made; and made on reasonable grounds.’

The legal firm wrote: ‘The core position under the code is that bidders will be expected to act consistently with their post-offer intention statements for the 12 months after the transaction has closed. 

‘Although the panel had a practice of privately following up with bidders on their intention statements 12 months after a takeover closed, the code has been revised to make that private practice a public one. 

‘Bidders are expected to comply with their stated intentions for 12 months after the takeover closes and must consult the panel if they decide to take a different course of action during that time. 

‘The panel will usually then require an announcement to be made, describing the alternative course of action and explaining the reason for the changed approach.

‘The bidder may also be required to set out its revised intentions in the announcement.’

Car Dealer again asked Lookers if it had contacted the Takeover Panel to inform it that it had taken a different course of action since taking ownership of the dealer group. It did not respond.

James Baggott's avatar

James is the founder and editor-in-chief of Car Dealer Magazine, and CEO of parent company Baize Group. James has been a motoring journalist for more than 20 years writing about cars and the car industry.

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