Auto dealer A.P. Eagers has succeeded in acquiring more than 90 per cent of all Automotive Holdings Group shares, reaching that important threshold just hours before its offer expired.
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The deal means some of the Hunter's biggest new car dealerships will be offered for sale.
The Newcastle Herald reported in June that the Australian Competition and Consumer Commission had raised "preliminary concerns" about the concentration of dealer ownership in Newcastle and the Hunter Valley that would arise if the Queensland-based AP Eagers was allowed to take over its larger rival, Perth-based Automotive Holdings Group.
Eagers is in the process of selling Klosters Motor Group and associated real estate to family-owned Tony White Group for $106.9 million to ease concerns it would have too much market power in Newcastle and the Hunter Valley region.
Now that AP Eagers owns 91.1 per cent of all AHG shares, the company can and will now compulsorily acquire the remaining AHG shares outstanding to complete its takeover.
The combined company will be Australia's largest car dealership company, with nearly 12 per cent of all new vehicle sales in 2018.
The Herald's Opinion: ACCC's concerns over Hunter impact of motor group merger
The largest shareholder in Eagers is longtime Sydney Roosters chairman Nick Politis, who controls 124.5 million shares - 37.5 per cent of the company - according to a notice lodged with the stock exchange on June 12.
Both AP Eagers and Automotive Holdings have grown rapidly in recent years, and the ACCC has said that a merged company would have almost 300 car, truck and bus dealerships between them, or 13 per cent of the national market. Their nearest rival would hold just three per cent.
In the Hunter, the ACCC says that Eagers and AHG have the two largest networks of dealerships, and are also each other's most significant competitor.
Together, they would own 36 of 78 Hunter dealerships, giving them 46 per cent of the market. For the top 10 brands, the ACCC says the two companies own 54 per cent of the dealerships across the region, while in metropolitan Newcastle, they operate 17 of the top 22 dealerships, giving them 77 per cent of the market.
The merged company will have over 200 car dealerships in Australia, 13 in New Zealand, and 67 new truck and bus dealership locations in Australia.
AP Eagers says the combined company will realise an estimated $13.5 million in synergies, through removing duplicated head office and corporate services costs, as well as AHG's costs associated with being a listed company on the ASX.
At 1129 AEST, AP Eagers shares were down 1.1 per cent to $13.16, while AHG shares were up one cent, or 0.2 per cent, to $3.50.
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