Lookers agrees acquisition of Midlands dealerships to deploy parts cash

Car dealership chain Lookers has added to its strength in luxury cars in the Midlands with the conditional £55.4m cash acquisition of Drayton Group.

The FTSE 250-listed group has agreed to acquire the seven-dealerships firm on the condition that Lookers itself sells its car parts division, which is expected to complete by the end of October.

Drayton, which is registered as Warwick Holdings Limited and has around a century of trading history beginning with the Model T Ford, has in recent years won the Mercedes-Benz Retailer of the Year prize four times and its locations in Stoke on Trent, Stafford, Shrewsbury, Wolverhampton, Walsall, Stourbridge and Worcester also include Smart franchises.

Lookers said it expected the acquisition to enhance earnings in calendar 2017, with Drayton having reported £276m of turnover in calendar 2015 and profit before tax of £5.2m, with gross assets of £84.2m and net assets of £22.0m.

Last Wednesday, Lookers announced the sale of the parts business for an agreed £120m cash and said the deal would be dilutive to earnings until the capital can be successfully redeployed via acquisitions in the motor division.

"As noted in our announcement on 10 August 2016, we are looking to accelerate growth and today's announcement shows we are putting the proceeds from the proposed disposal of the parts division to work as quickly as possible," said chief executive Andy Bruce.

He said he was very impressed with the quality of Drayton Group's business and customer service, with the firm offering sales, parts, service and repair facilities for both new and used cars.