Car dealer Lookers yesterday warned the equivalent of more than 25 per cent of its 2005 revenues could be at risk if bigger rival Pendragon succeeds with its hostile bid for the firm.
Lookers, which is fighting an all-share offer worth about #259 million when launched last month, said franchises generating #326 million of revenues in 2005, or 26.5 per cent of the total, could be lost if the deal goes ahead.
"In the event of a change of control of Lookers, the manufacturers that are represented by these franchises have the right under the existing franchise or other agreements to terminate their agreements, or to require the franchise business to be transferred back to the manufacturer," Lookers said in a statement.
The firm said it had already received written notifications from three of its vehicle manufacturer partners stating their intention to discontinue in whole or in part their relationships with Lookers in the event it is bought by Pendragon.
Pendragon challenged Lookers comments, saying shareholders should be aware that any provisions attempting to limit changes of control of dealerships, where the purchaser already has a franchise of the relevant brand, would not satisfy European Union rules and "should therefore not be enforceable".
The offer provided Lookers' shareholders the opportunity to align their investment with a management team focused on building value for shareholders rather than one trying to assign it to vehicle manufacturers, Pendragon said, adding that it continued to believe its offer was compelling.
Pendragon is offering 1.15 new shares for each Lookers share, equivalent to 725 pence for each Lookers share when the offer was launched.
Lookers shares closed down 1.1 per cent at 723 pence, while Pendragon ended up 0.2 per cent at 620 pence.