1:03 pm, June 4, 2020
Vertu Motors should look at buying troubled dealer group Lookers or consider a merger with Marshalls.
That’s the opinion of an active Vertu private shareholder who told Car Dealer Magazine that he believes the group should be picking up the ‘low hanging fruit’ in the car dealer world during this crisis.
Industry analysts and experts have told Car Dealer that they believe consolidation on this sort of scale is very likely in the coming months.
Boss of the group, Robert Forrester, told us yesterday that he is on the acquisition trail and ready to pounce on opportunities to grow when they present themselves. You can see what he said in the video above.
Now, Vertu investor Bruce Beaton has told us he believes the main target should be Lookers, who are ‘dead in the water’.
He said: ‘Vertu are now larger by market cap than Lookers. Marshall Motor Group would be a better buy, but they have no pressure to sell, so maybe a merger.
‘Pendragon is easy to reverse into as Bill [Berman] sees only assets, but it would be difficult to integrate. I think Lookers are geographically more suitable. Vertu could sell the Irish operations and overlapping territories to net back cash.’
Beaton said he believes other groups that could pounce include Sytner and Arnold Clark.
He added: ‘Lookers are dead in the water with investors and funders and the most likely result is an absorption into a well funded Plc.’
Pendragon boss Bill Berman told Car Dealer Magazine that he wrote to the chairman of Lookers and suggested a meet to discuss a merger. However, that approach was turned down.
Beaton added: ‘Pendragon were not that partner. Vertu and Marshall are best placed to pick the low hanging fruit and scale their businesses. Big mistake now would be tying up resources in buying small scale businesses.’
Automotive industry analyst Mike Allen, from Zeus Capital, said merger and acquisitions could remain on the agenda as the industry goes through radical change.
He said: ‘We have seen consolidation rumours before with Pendragon approaching Lookers about a merger, and such activity could well remain on the agenda in the coming months as companies trade through the impact of lock down.
‘Overall, we believe Vertu has the right ingredients to come out of this relatively strong as a consolidator given its scale, brands, stable management team, digital expertise, financial resilient and support from its OEM partners.’
Mike Jones, chairman of accountancy firm ASE Global, said consolidation in the car dealer world is very likely in the not too distant future.
He said: ‘We will undoubtedly see further significant consolidation in the UK motor retail sector as we move through the next two years, with a move to fewer representation points and increased omnichannel retailing.
‘There would be significant cost benefits in the creation of a new “mega-group” however any merger or acquisition would have to gain the approval of the respective franchise partners, who will naturally seek to protect the amount of exposure they have to any individual retail partner.
‘Most retailers will be currently concentrating on achieving a successful opening week, catching up on the lost orders from the end of March and in addition Lookers are still in the process of their FCA review and their internal fraud investigation.
‘Having said that it doesn’t take long for the entrepreneurial drive and opportunistic nature of the motor sector to take hold, with buyers looking for opportunities to make a strategic land-grab during this turbulent time and my phone is already warming up with interest from buyers and sellers.’
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