Lookers, owner of the former Taggarts chain of car dealerships in Scotland, is set to come under Canadian ownership after the board and major shareholders agreed to a takeover offer worth nearly half a billion pounds.

The Manchester-based group announced yesterday that it has negotiated a deal with Alpha Auto Group of Ontario, which owns 15 large-scale new car dealerships in Canada and the United States. The bid of 120p per share values Lookers at £465.4 million.

Lookers is the third-largest motor retail chain in the UK, with approximately 140 franchised dealerships representing some 30 manufacturers. It Scottish outlets include sites in Edinburgh, Motherwell, Glasgow, Stirling and Ayr.

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Alpha will buy Lookers through its Global Auto Holdings bidding company, which is owned by Alpha founder Kuldeep Billan and referred to as “Bidco” in the stock exchange filing.

The filing noted that the enlarged business will benefit from the combination of “two strong and deeply experienced management teams” and that there are no plans to change employment conditions across the wider group, nor the functions of the Lookers management team led by chief executive Mark Raban.

Mr Raban was appointed to the top job in February 2020 and has led the company through a restructuring during the difficult trading conditions of the pandemic. He also steered Lookers through an overhaul of its corporate culture after a fraud probe in 2020 uncovered a £19m black hole in the company’s accounts.

Since then, however, Lookers has rebounded to report record profits in 2021 and a further strong performance last year. The group announced in October that the Taggarts brand would be changed to Lookers 20 years after the two companies originally merged.

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“Today’s offer reflects the transformational progress that has been made in recent years,” Mr Raban said. “We have harnessed our strong market position, enhanced our brand relationships, and executed well against our six strategic priorities.

“I am excited about the combination with Bidco. It will create a business of greater scale, and bring together two successful businesses with complimentary OEM relationships, and a strong platform to support future growth in the UK.”

The board of directors are unanimously backing the deal alongside investors who hold 42% of the company’s shares. Lookers said the TDR Capital, Artemis Investment Management, J O Hambro Capital Management and Schroder have all promised to vote in favour of the deal.

The cash offer price is about 35% more than the level at which the London-listed company’s shares were valued on Monday, the last day of trading before the bid was announced.

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Mr Billan said Alpha is “deeply committed” to the UK, where Lookers employs approximately 6,500 people, adding that the acquisition is a “compelling opportunity”.

"With the UK auto retail market undergoing substantial change, including the adoption of new distribution models, we believe that the wider group is well positioned to navigate the current environment with geographically diversified operations and a focus on operational excellence,” he said.

“The wider group will benefit from the continuity of Lookers' executive team, our shared values and an unwavering commitment to operating with the highest levels of integrity for the benefit of all stakeholders.”

Founded in Manchester in 1908 by John Looker, the business originally sold bicycles and the occasional used car. It quickly switched to selling mainly cars, and in 1973 it listed on the London Stock Exchange.

Lookers interim chairman Paul Van der Burgh added: “After a period of extensive engagement between the parties, the offer represents an attractive opportunity for our shareholders to realise cash now for their investment at a significant premium to the prevailing share price.

“We have spent considerable time reviewing the potential impact of Bidco’s ownership on Lookers’ wider stakeholders and are confident that the commitments given by them will protect stakeholder interests. Bidco has clearly outlined its commitment to continue supporting our customers, operations, communities, and most importantly our talented and committed people.”