A new report from ICDP has taken a close look at recent merger and acquisition transactions in the UK and Europe to find out how changes in ownership may develop in the future.
Its findings show that “The UK has seen continual consolidation domestically through medium and small deals executed by the large groups. But favourable exchange rates have now attracted international buyers.”
It also claims that the forthcoming retirement of Trevor Finn, CEO of Pendragon, has stirred up interest from investors as an opportunity to “reach scale at a UK national level as the management change introduces some uncertainty.” However, unless this happens, the report predicts that the progression of concentration and consolidation in the UK will be slow.
In Europe, it is expected that international investors will begin to enter the market, and existing investor will look to expand to additional markets.
In France, M&A has accelerated through small deals to aid in the development of regional groups. “Most large French groups remain regional and brand-focused, with no equivalent of the diversified large UK players,” the report states.
Germany has seen a significant amount of deal activity. This has, however, mostly involved a local player acquiring one or a few additional outlets. “Inward investment has been by Penske taking control of an existing minority partner, LSH acquiring Mercedes-owned outlets, as they have done elsewhere, and Swiss-based Emil Frey making adjustments to their existing portfolio”, ICDP reported.
In summary, the report reads: “Overall, these represent a steady flow of deals rather than a torrent. OEMs remain influential in encouraging deals, such as PSA effect on Opel/Vauxhall, and discouraging them where they fear too high a concentration of retail power. However, as markets soften, but new retail models demand investment, we believe that OEMs will need to be more open to working with larger and growing groups to meet their shared objectives.”