Nice money; if you can get it

  08 May 2011

Whichever way you look at it, it’s been a good week for Jack Petchey. The veteran auto retailer investor owns around 66.22 million shares in Lookers and they’ve risen by 7.5p over the past ten days. So, that’s a neat paper profit of almost £5m.

Why did the shares rise? Not because Mr Petchey and his consortium partners, Moor Park Capital and Brett Palos, have made a bid for the company. All they have done so far is made an approach to the Lookers board asking for information relating to a “possible offer”.

Given the background of the parties involved – they are all real estate speculators – we can safely assume that the information requested is detail about Lookers’ property portfolio. In the last set of company accounts, it was valued at £181m. Meanwhile, the current market capitalisation of the whole company (the cost to buy all the shares) is around £260m

The speculation is that the consortium would want to split the property away from the operational side of the business and, presumably, then resell the operational bit back to a third party. In other words, a classic asset strip. For certain, Mr Petchey and Mr Palos don’t want to actually run car dealerships – though, to be fair, Jack Petchey did sell cars in the early stages of his career.

But the suspicion remains that this is not a serious bid for the business; just an attempt to shake the company up and get the share price on the move. Mr Petchey has history in this regard having previously stirred up trouble at HR Owen, among others, and he is a known ‘active’ investor.

To be fair, if I’d put that much money into a company (I wish), I’d be wanting to see a substantial return on it too. But the City takes a dim view of people who stir up bid rumours without foundation. Hence the ‘put up or shut up’ deadline of 8 June.

We wait the next moves with eager anticipation. Some market analysts have already decided the bid has no future and Lookers shares have started to drop back. If you managed to sell at the top: good move.

Have a good week, both in and out of the showroom. If you’ve got any gossip for us, e-mail: rupert@auto-retail.com

Rupert Saunders

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