Pendragon buys Reg Vardy

Monday, December 05, 2005

Reg Vardy sold for £450 million
Pendragon will own 7% of UK showrooms
Buyout could lead to higher car prices

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The UK's biggest car dealer is paying £450 million to buy one its largest rivals.

Pendragon will pay 800p for each Reg Vardy share after negotiations between the two companies reached a successful conclusion at the weekend.

The deal means Pendragon will own approximately 7% of all UK showrooms, nearly twice as many as it did before the deal.

Analysts believe the move could spark a flurry of takeovers and mergers. If car dealership chains start to mimic other big retail sectors, such as supermarkets, it could mean bad news for buyers.

Professor Garel Rhys, director of the Centre for Automotive Industry Research at Cardiff Business School, told whatcar.com: 'In the future, car sales could be controlled by a handful of big companies, rather than the current proliferation of small organisations.

'In the short term, consumers may get a better deal, as companies fight for market share, but in the long term the biggest players could control prices and charge buyers more.'

The Vardy family, which has 27.2% of Reg Vardy shares, stands to net almost £125 million thanks to the sale of the company to Pendragon.