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Pendragon-Lookers merger talks break down

The motor dealer confirmed it had held discussions with its rival about a potential tie-up
Pendragon-Lookers merger talks break down

Following a report by Sky News, Pendragon (PDG) has confirmed that it held discussions with rival car dealer Lookers (LOOK) regarding a potential tie-up. The talks have now ceased.

Pendragon believed a merger could have been beneficial for both businesses and attractive to their respective shareholders. Sanjay Vidyarthi, an analyst at Liberum, is sceptical in light of the companies’ high operational and financial gearing and pension deficits. Lookers’ results have also been delayed as it examines potentially fraudulent accounting activity, and it remains under investigation by the Financial Conduct Authority (FCA).

“With nearly 300 dealerships between them across a broad range of brands, optimising the portfolio would be a big task and distraction,” says Mr Vidyarthi. “There is no obvious unifying strategy. Cost reduction alone would not be a sufficient rationale.”

Elsewhere, Gulf Marine Services (GMS) has rejected an unsolicited takeover offer from Seafox International, valuing the company at $32m (£26m). It says “now is not the time for shareholders to sell at a price that is far below the true worth of GMS”.