Motor dealer Lookers yesterday urged investors to help defeat a hostile takeover bid by rival Pendragon and consider any offer below £329.5 million as too low.
Lookers said the £258 million all-share offer put on the table by Pendragon undervalued the company by more than 21 per cent and warned shareholders that it would put their investment at risk.
In its defence document posted to shareholders yesterday, Lookers claimed Pendragon was "highly indebted" and estimated that its financial commitments totalled more than £1.4 billion.
A fourth car maker had also notified Lookers that it would withdraw franchises in the event of a takeover by Pendragon.
Lookers had previously told shareholders that three vehicle manufacturers were considering walking away and the addition of another company meant the potential loss of annual revenues now stood at £232 million.
Media reports suggested that SEAT was prepared to follow Volkswagen, Bentley and Vauxhall in ending franchise agreements if the hostile bid succeeds.
Lookers, which operates more than 100 dealerships in the UK with most in the North West and Northern Ireland, posted record results for the first quarter and predicted that adjusted pretax profits would be at least £25.1 million this year.
Annual profits at this level would be 39 per cent above its haul for the previous 12 months and chief executive Ken Surgenor believed it demonstrated that Pendragon's offer was "wholly inadequate".
"In addition, shareholders' investment in Lookers' exceptional growth prospects could be at severe risk if they choose to accept Pendragon shares," Mr Surgenor said.
In the first three months of 2005, Lookers saw turnover rise by 17 per cent to £385 million and underlying pretax profits increased by 90 per cent to £11 million.
Sales of new cars were up 12 per cent on a like-for-like basis to exceed the rate of growth in used car sales at eight per cent.
"It is ironic that our strategy is being questioned when we continue to outperform the market and have performed exceptionally well in the most important trading period of the year," Mr Surgenor said.
Lookers had the broadest revenues streams in the industry and was arguably better equipped than any of its peers to thrive in the current retail environment, he added.
Pendragon, which recently took over Reg Vardy, has a total of 382 franchises from 323 outlets in the UK and 22 franchises from 15 outlets overseas. It believes the synergies from a three-way consolidation involving Lookers and Reg Vardy would be considerable.