Australia’s two largest car dealerships, AP Eagers Ltd (APE) and Automotive Holdings Group Ltd (AHG) may be merging their two businesses to create a $2.4 billion market leader.
APE Ltd chief executive officer Martin Ward says the proposal brings together two highly complementary businesses.
“The Offer enables AHG shareholders to participate in the upside and benefits afforded by AP Eagers’ proven management expertise and strategy which is expected to enable the combined group to grow and be better placed to respond to the rapidly evolving motor vehicle retailing market.”
If merged, they would be Australia’s leading automotive retail group.
APE shareholders will receive 1 APE share for every 3.8 AHG shares. The implied value per AHG share will be $1.916, up from AHG’s last exchange traded closing price of $1.79.
The proposal offers the merged group 229 new car dealership locations in Australia, 13 in New Zealand, and 68 new truck and bus dealership locations in Australia.
APE also claims it could find $13.5 million in annual cost savings per year, and greater financial strength to pursue growth opportunities.
However, AHG released a statement recommending shareholders take no action in relation to the APE takeover offer.
“We will assess APE’s proposal in the context of the fundamental value for our businesses, the value of the APE shares being offered and the value that can be delivered to shareholders under alternative scenarios,” says AHG board acting chair John Groppoli.
“We are taking a strategic review of refrigerated logistics and continue to explore our options in relation to this asset.”
The Board will evaluate the proposal and provide shareholders with a recommendation in due course.
APE owns 28.84% of AHG.
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