The AP Eagers Ltd (ASX: APE) and Automotive Holdings Group Ltd (ASX: AHG) share prices are 2.9% and 2.2% lower this morning after the competition regulator the ACCC announced its concerned about their proposed merger's impact on new car retailing in the Hunter Valley / Newcastle region.
"A combined AP Eagers and AHG would operate 46 per cent of new car dealership sites in the Newcastle/Hunter Valley region, including those for the ten most popular brands, and runs 54 per cent of the dealership sites selling those brands. In metropolitan Newcastle alone, the combined company would operate 77 per cent of dealership sites selling the ten most popular brands," ACCC Acting Chair Delia Rickard said.
The good news for the potential merger partners is that the Newcastle / Hunter areas are the only ones nationally where the ACCC has flagged "concerns".
As such if the ACCC were to move to block the merger on these grounds either group could move to sell off assets as an olive branch to get the deal approval.
Recently, we saw Bingo Industries Ltd (ASX: BIN) sell off waste disposal assets in Sydney's east to get its Dial-a-Dump deal over the line, while TPG Telecom Ltd's (ASX: TPM) typically Machiavellian move to cancel its mobile roll-out plans in an attempt to get its merger with Vodafone approved failed to impress the regulator.
Arguably though there are good grounds to think that a court will throw out the ACCC's verdict on the TPG/ Vodafone merger in just a few months' time.
