AP Eagers’ $2.3 billion takeover offer for Automotive Holdings Group (AHG) is now unconditional, and AHG directors have recommended shareholders accept the offer.

AHG shareholders have until 16 September to accept the offer, which would see them issued AP Eagers shares within seven days, and make them eligible to receive any special dividend declared at AP Eagers’ half year results.

In a statement, AP Eagers said it had an interest equivalent to 62.4 per cent of AHG shares.

“At this shareholding level, the chance of a competing offer emerging is very low,” the statement said.

The new entity will take over from AHG as the largest automotive dealership group in Australia.

The Australian Competition and Consumer Commission (ACCC) had previously given conditional approval to the merger acquisition, after AP Eagers satisfied concerns that the proposed acquisition was likely to substantially lessen competition in the retail supply of new cars in the Newcastle and Hunter Valley region.

To address the ACCC’s competition concerns, AP Eagers offered a court enforceable undertaking pursuant to section 87B of the Competition and Consumer Act 2010 to divest its existing new car retailing dealerships and related business sites in the Newcastle and Hunter Valley region.

The ACCC accepted AP Eagers’ divestiture undertaking on 24 July, 2019.

The ACCC was concerned the merged dealer giants would own “half of the 78 dealerships” in the Newcastle/Hunter Valley area, and sought market dilution to protect consumers.

The court enforceable undertaking means AP Eagers will sell its franchised dealerships and affiliated businesses in Newcastle and Hunter Valley to an independent, ACCC-approved buyer.

AP Eagers will sell Kloster Motor Group to the Tony White Group for about $54 million. However, AP Eagers will retain the AHG-owned new car dealerships in the region that it proposes to acquire.

ACCC Commissioner Stephen Ridgeway said he was satisfied the merger could proceed without giving customers no choice but to buy from an AHG/AP Eagers dealership.

“If we had allowed AP Eagers to combine its dealerships with AHG’s in this region, the reduction in competition in that market may have meant consumers would pay more for new cars,” he said.

“AP Eagers’ divestiture means there will be no increase in market concentration in the Newcastle and Hunter Valley region.”

In total, AP Eagers represents 27 car brands and 10 truck/bus brands, which operate from 110 new car dealerships and 33 new truck and bus vehicle dealerships in Queensland, Northern Territory, New South Wales, Victoria, Tasmania and South Australia.

The merged entity is expected to have approximately 231 new car dealerships and 68 new truck and bus dealerships in Australia as well as 13 new car dealerships in New Zealand, representing 33 car brands and 12 truck brands.

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