ACCC gives conditional green light to AHG takeover

The competition watchdog has accepted AP Eagers' proposed takeover of rival car dealer Automotive Holdings Group, on the condition AP Eagers sells its dealerships in Newcastle and the Hunter Valley region.

Last month, the Australian Competition and Consumer Commission raised concerns that the combined $2.3 billion company would have control of 46 per cent of new car dealerships in the Newcastle/Hunter Valley region of NSW.

To assuage the ACCC’s concerns, earlier this month AP announced it has a non-binding agreement to sell its Kloster Motor Group to Queensland-based Tony White Group by November for $54 million.

Klosters has 11 dealerships in the region.

Today, ACCC commissioner Stephen Ridgeway said the watchdog would approve AP’s takeover if the sale of Kloters went ahead.

“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 10 car brands,” he 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.”

AHG shareholders have until September 16 to decide whether to accept or reject AP Eagers' offer of one share of AP Eagers for every 3.8 AHG shares held.

Shares in AHG were flat at $2.90 at 11.30am AEST.