AP Eagers and AHG Possible Merger.

[csv8]

THE 106-year-old AP Eagers wants to merge with its major competitor to create the country’s biggest car retailing group amid growing signs of consolidation in the auto market.

Brisbane-based AP Eagers said the merger with Perth-based AHG would create a company worth $2.42 billion, with 229 new car dealerships in Australia and 13 sites in New Zealand.

AP Eagers chief executive Martin Ward said the proposed merger brought together two highly complementary businesses as they prepared for looming industry changes, including the emergence of popular brand electric vehicles. https://www.couriermail.com.au/busin...9e6d4995448a2e





“The merged group is expected to be better placed to pursue future growth opportunities through greater geographical portfolio diversification .and a larger more flexibile balance sheet,” said Mr Ward.

Under the merger proposal, AP Eagers, which already owns 28.84 per cent of AHG, will offer one AP Eagers share for every 3.8 AHG shares.

The combined company, whose headquarters will remain in Brisbane, will represent 33 car brands and 12 truck and bus brands, including all of the top 26 leading car brands.


AHG told shareholders to take no action while the board evaluated the “unsolicited conditional takeover offer”.

“The AHG board strongly believes in the underlying growth prospects and strengths of each of our businesses,” said AHG acting chair John Groppoli.

The auto retailing industry is facing rising disruption in the form of electric cars, autonomous vehicles and ride-sharing apps.

Mr Ward said that the company, which was founded in 1913, was preparing for changes, which would likely see the “big glass box” showrooms being replaced by smaller showrooms located in satellite locations such as shopping centres.

AHG skidded to a first-half loss in February, citing a tough retailing environment and regulatory changes to finance and insurance.

It scrapped its dividend and cut its guidance after a $223 million writedown against its struggling franchises and refrigerated logistics businesses.

The planned merger would give the combined company 11.9 per cent of the Australian car market with a presence in all Australian states except the ACT.
“We are going to be stronger together and this will give us a better opportunity to address the changes occurring in the future in the form of electric vehicles, connected cars and automation,” said Mr Ward.

“These changes are not going to happen overnight but will play out over the next 10 to 20 years as customer preference change.”

Mr Ward said car makers who supplied vehicles to the company were spending $100 billion developing electric and automated vehicles.

AP Eagers shares rallied 5.6 per cent or 41¢ to $7.69 on Friday, while AHG surged 20.8 per cent or 37¢ to $2.15.

[Poetic Justice]

As a new car manager in the industry it intrigues me.

I was surprised to find out how much they already owned of AHG.

[Franco Cozzo]

Whole automotive industry in this country is being divvied up between the big players, particularly in the auto parts game.

GPC Asia Pacific and BAPCOR are like Coles and Safeway (It will always be 'Safeway' to me not this 'Woolies' crap)

[hayseed]

A.P.Eagers is a far better run business than AHG (In my personal opinion)

[Ford17]

Originally Posted by Franco Cozzo

Whole automotive industry in this country is being divvied up between the big players, particularly in the auto parts game.

This was advantageous for us when we were offloading the wife's car as a trade-in.

It had a few 'issues', which the salesman didn't want us to admit to on account of AHG's sheer size, and their ability to deal with less than perfect vehicles.

Bidding farewell to that lemon was both a satisfying, and a remarkably painless experience.

[IanC]

A few years back when we went shopping for a new hatchback we found that every dealer was offering us the exact same trade in value and no discount off the new vehicle. There was no competition until we went to a country dealer who offered us a much better deal and got our business.

[GTLEGEND]

I wonder how the ACCC would view this. Not sure on the ruling exactly, but is one company not allowed to have so much ownership of an industry to have a near monopoly and thus control the market?

Does not sound like a good thing to me, most of the big companies only care about the bottom line, not the individuals that make it all happen and work hard to do so. They also seem to run very lean where multiply positions are carried out by one person, that is until they burn out. Good company's are made of good people, not those who's only mission is to make as much money to appease share holders!