Car dealership Reg Vardy has posted record half year profits as it highlights why it is facing a potential £450 million bidding war.
The firm, which has a number of outlets in the West Midlands, made profits of £21.1 million before exceptional items for the six months to October 31 - up 22 per cent despite a fall in demand for new cars in the UK.
Reg Vardy, which has 102 franchised and non-franchised dealerships, already has a £450 million offer on the table from Nottinghamshire-based Pendragon.
However a smaller rival, Manchester-based Lookers, is considering trumping the bid and is set to report to the City on its plans later in the month.
Vardy said turnover rose nearly 16 per cent to £1.08 billion in the period.
It added that trading in November and December had been in line with expectations and that it remained confident for the full year.
Chief executive Sir Peter Vardy told shareholders: "The group has delivered sales growth and a record profit in the first half of the financial year against a challenging market backdrop.
"This has been achieved through improved management and systems, coupled with enhanced returns from underperforming dealerships acquired in recent years.
"With this proven strategy for growth, we continue to deliver significant value to shareholders."
Shares were unchanged at 825p after hitting 845p on December 21 when Lookers announced it was preparing to beat the Pendragon bid.
Lookers said it would be looking at the "fine detail" of Vardy's interim results and that it would seek to clarify its intentions very soon. However, the company added that it still expected to put forward an "alternative proposal" to the Reg Vardy board.
Sir Peter and other members of the Vardy family have already pledged their 27.2 per cent stake and have given irrevocable commitments to sell to Pendragon. He and his family stand to make around £125 million if the Pendragon deal goes through.
Sir Peter has also given Pendragon a call option on his own shares - 16.6 per cent of the company - which allows Pendragon to buy his stake at 800 pence even if another bidder makes a higher offer.
Some analysts reckon Lookers will have to pay at least 850 pence a share to secure a recommendation from the Vardy board, which will also have to pay a £4.55 million break-fee to Pendragon if it decides to accept a higher rival offer.
A combination of Pendragon, the UK's biggest car deal-ership group, and Reg Vardy would create a company with a market capitalisation of some £1 billion and annual sales approaching £5 billion.