Takeover talk boosts car dealer groups’ share price

The latest European Auto Retail and Services Stockwatch report by financial analyst Houlihan Lokey, found that HR Owen, in particular, had seen its stock rise as speculation of a bid for the group persisted.

The report said HR Owen’s value had risen with the sale of shares to Australian car wholesale and retail group Balverona.

Balverona has built up 26.7 per cent stake in the luxury dealer group, ranked 31 in the Motor Trader Top 200 – close to the 30 per cent threshold that would require it to make a public offer.

While Pendragon’s share price weakened in January, it rallied last week amid industry speculation that the UK’s largest group, which is traditionally acquisitive, could itself be the subject of a takeover bid.

“Pendragon shares have recovered a little ground since the end of the month,” said Philip Wylie, director at Houlihan Lokey.

“However, despite the rumours the bounce is not enough to suggest that the market really believes a bid for the group is imminent.”

In contrast, Lookers shares fell by 24 per cent during January but management continued to invest in the company, with non-executive director Tony Bramall buying a further £485,000 shares to add to his 19.75 per cent stake.

Wylie said that Lookers shares had been hit hard by management comments that margins for both new and used vehicles have come under pressure.

Caffyns, and Vertu also saw shares fall in January,

Wylie said Caffyns shares weakened when management warned that margins in its second fiscal period were likely to be considerably weaker than in the first half.

Inchcape, which announced a share repurchase programme at the end of December 2007, bought nearly 3 million of its own shares for around £11m during the month.