When will we see the first UK £10bn supergroup?
03 May 2020
Saturday’s news that Pendragon, under the command of new CEO Bill Berman, made an approach to Lookers with a view to merge the two firms is interesting on several counts.
Firstly, there’s the timing. As one analyst told Auto Retail Agenda: “It’s odd, to me, given all dealers will be burning cash and should be focusing on how they get out of this.”
Of the retailers we’ve spoken to, it seems there’s a split between those that have kept as much open as possible but are still “burning cash”, and those that have almost entirely put their businesses on hold to save as much cash as possible.
As part of the research around this, I thought I’d see if any of my local franchised retailers for my own car were taking service bookings – my car’s service (and MOT) is due in mid-June.
Only my fifth nearest was open at all, and even then, only for essential worker vehicles. My need isn’t urgent, so I left it. But as soon as more retailers open, I’ll be glad to give them my business again. I suspect many others feel the same.
Back to Lookers and Pendragon, the proposal was also interesting because it was rejected due to the timing – it was suggested Lookers was too busy dealing with coronavirus, and also the ongoing FCA investigation over finance sales.
This seems to suggest the deal could be back on at a later date.
The third interesting point is that the emergence of a £10 billion turnover ‘supergroup’ is highly likely, and that the coronavirus pandemic has probably sped up the timetable for such a retailer. As in any financial crisis, those with deep enough pockets will see opportunity.
More than one leading industry figure I’ve spoken to recently has said they expect such a group to emerge before the end of 2020. This latest approach makes me think this is a fairly safe bet.
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