Lonrho sells car dealers for pounds 113m
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Your support makes all the difference.Jack Barclay, the country's biggest Rolls-Royce and Bentley dealer, changed hands yesterday as part of a pounds 113m management buyout of the Dutton- Forshaw group from Lonhro. Andrew Yates assesses the future of Lonhro as it seeks to turn itself into a pure mining company.
Jack Barclay's car showroom in Berkeley Square is a regular haunt for the rich and famous who demand only the best. Set up 70 years ago by the famous racing driver, who held eight world records, the business was acquired by Dutton-Forshaw in 1977 and fell into the hands of Lonhro two years later.
Now Jack Barclay, along with 30 other Dutton-Forshaw dealerships, has been bought by a management team led by chief executive Robert Robinson and backed by CVC Capital Partners, the venture capitalists. Dutton-Forshaw employs 2,500 people and also sells makes such as Jaguar, Land Rover, Vauxhall and Ford.
The deal is the latest sign of the restructuring in the motor industry, which has been thrown into turmoil by manufacturers' demands to deal with only one distributor in one area.
"This business requires a lot of capital expenditure and we will invest significantly in the dealerships. Winners and losers are emerging in this industry and we want to be winners," said Rob Lucas, a director of CVC.
Dutton-Forshaw was making a loss a few years ago but its management team has steered it to recovery. It made a profit of pounds 4m for the 12 months to September 1996, but that figure is understood to have increased substantially this year.
Lonhro was prevented from making a trade sale as it would have enabled manufacturers to renegotiate franchises. It considered a flotation but believed it could get a better price from a management buyout.
For Lonhro the move marks the latest step in its plan to dispose of its non-mining interests. The $450m sale of its Princess luxury hotel division has been postponed due to a wrangle over price with Saudi Prince Al-Waleed bin Talal. Lonhro has put the chain back on the market and is in talks with three international hotel groups about a sale.
It also plans to demerge its African trading interests by the middle of next year. With gearing virtually eliminated, Lonhro is keen to expand its mining business and has JCI, the South African mining group, in its sights. The group hopes to tie up a deal within a month, ending a long running saga between the two groups.
Lonhro rejected overtures from JCI earlier this year. However now the South African group has disposed of most of its gold mining interests Lonhro sees it as an attractive target and wants to marry its own coal interests with JCI's Tavistock coal mining business.
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