Lookers blinks first in takeover

The move came after Vardy backed a £506m offer from Pendragon.

Lookers said it was in the best interests of its shareholders not to proceed with a bid for Vardy after its £492m offer was trumped by Pendragon's 900p a share bid late on Friday.

Reg Vardy yesterday said it intended to recommend the latest revised proposal from Pendragon - the largest of the three companies - to shareholders.

In a statement, Lookers said: "After considering its options, the Lookers board believes that it is in the best interests of its shareholders not to proceed with an offer for Reg Vardy and, accordingly, does not intend to implement its proposal to acquire Reg Vardy by way of a scheme of arrangement."

Despite the setback, Lookers told shareholders it intended to expand this year.

It said: "Lookers remains committed to its proven strategy of strengthening its new car franchises, used cars and after sales presence through organic growth and by acquisitions."

The takeover race started in November when Pendragon began eyeing Vardy.

The company saw how Vardy's £230m takeover of North Yorkshire's CD Bramall chain in 2004 protected it from a slowdown in the car industry. Lookers launched its counter bid on January 17, improving Pendrongon's 800p a share offer by an extra 75p a share.

Last week, Pendragon approached Lookers offering a three-way merger to create a business worth £1.36bn, with turnover of about £6bn a year.

Lookers rejected the approach saying it undervalued the company's prospects.

Pendragon, which is based in Nottingham, has about 230 sites, including specialist and luxury franchises, such as BMW, Ferrari and Land Rover, while Vardy owns 102 sites, mainly in the North-East, and Lookers has about 90.

Vardy chairman John Standen said the combination of his business with Pendragon would create a "formidable force" in the motor retail sector.

He said: "I am pleased that such a satisfactory result is being achieved for shareholders."