(Adds premium, CEO comment, details on deal, background)
April 5 (Reuters) – Australian automotive retailer AP Eagers Ltd on Friday made an all-stock offer to acquire smaller rival Automotive Holdings Group Ltd that valued the company at A$635.3 million ($451.83 million).
AP Eagers, which is Automotive Holdings’ biggest shareholder, made an offer of 1 share of the company for every 3.8 Automotive shares owned.
The offer price of A$1.92 represents a premium of about 8 percent to Automotive Holdings’ last close.
AP Eagers’ Chief Executive Martin Ward said the deal would put the combined group in a better place “to respond to the rapidly evolving motor vehicle retailing market.”
AP Eagers’ expects the acquisition to deliver annual cost savings of about A$13.5 million.
Automotive Holdings has been hit hard by a downturn in consumer spending in Australia, with the company recording a first-half loss in February and deciding not to declare an interim dividend.
In its earnings statement, Automotive also said it had started a strategic review of its underperforming refrigerated logistics business after China’s debt-saddled HNA Group Co Ltd cancelled its A$280 million offer for the business in July last year.
AP Eagers said the chances of a possible rival bid were low given its existing 28.84 percent stake in Automotive Holdings. ($1 = 1.4061 Australian dollars) (Reporting by Aditya Soni in Bengaluru; Editing by Sandra Maler and James Dalgleish)