Green light for AHG, APE merger

The sale of AP Eagers’ Hunter dealerships has cleared the way for its merger with rival Automotive Holdings Group.

AP Eagers chief executive Martin Ward. Picture: Mark Cranitch.

The ACCC has conditionally approved the $2.3 billion merger of car retailers AP Eagers and Automotive Holdings Group.

The approval came after AP Eagers said it would offload its Hunter Valley dealerships in New South Wales. Those properties had been the only roadblock preventing the deal receiving approval from the competition watchdog.

Under the court enforceable undertaking, AP Eagers will sell its new car dealerships in the Newcastle and Hunter Valley to an ACCC approved, independent purchaser. But APE will retain the new car dealerships in the region it would acquire by taking ownership of Automotive Holdings.

Earlier this month, AP Eagers said it would sell off its dealerships in the Hunter region after the Australian Competition and Consumer Commission raised concerns over the deal, saying it could lessen competition for new car sales in the region.

The competition watchdog said in June that the tie-up was unlikely to substantially lessen competition for the supply of new cars nationally.

“We were concerned that a combined AP Eagers and AHG would own about half of the 78 dealerships in the Newcastle and Hunter Valley region, and in metropolitan Newcastle, about three quarters of the dealerships that sell the top ten car brands,” ACCC Commissioner Stephen Ridgeway said.

“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.”

The merged company would be Australia’s largest automotive dealership group, a title AHG already lays claim to.

AP Eagers, which already holds a 28.84 per cent stake in Automotive Holdings, has offered one share for every 3.6 shares in AHG it doesn’t already own under the deal.

“We are delighted with the ACCC’s decision regarding the grant of merger authorisation,” AP Eagers chief executive Martin Ward said.

“In view of that decision, we encourage any AHG shareholders who are yet to accept our offer to do so in order to participate in the scale and synergy benefits afforded by the merger and any dividends approved by the AP Eagers board before the end of the offer period.”