Vardy (Reg)

Brewin Dolphin acted as joint broker to Vardy (Reg) plc for several years before, in Nov 2005, the company received an unsolicited approach from Pendragon plc that valued Vardy at 750p per share (£421m). Across the bid period a small team from Brewin Dolphin worked closely with the Board of Vardy providing advice and guidance on the most appropriate strategy to realise the maximum returns for its shareholders.

Vardy’s operating model consistently produced industry leading financial performance and the company had built its premium reputation and powerful industry position on a combination of dependability and prudence. With its excellent track record, respected management, a strong balance sheet and significant asset backing as well as its strategic importance within the sector a compelling case could be made for a significant valuation premium for the business.

Vardy and Pendragon were two of the main quoted participants in the motor retail sector and a combined business was likely to strengthen relationships with the manufacturers and enhance shareholder returns through wider opportunities and synergies across the enlarged group.

Further proposals were received prompting Pendragon to increase its offer to 800p per share (£450m). A second trade buyer, Lookers plc, continued to explore its options and tabled an 875p bid in mid January 2006.

In February 2006 Pendragon increased its bid to 900p per share (£506m), which was recommended by the Board of Vardy and went unconditional in mid February.

The final bid level was some 61% above the average share price of Vardy for the six months prior to Pendragon’s initial approach. Across this 10 week period an additional £85m of value was extracted to the benefit of the Vardy’s institutional and private shareholders.