Why the Automotive Holdings share price has doubled this year

The Automotive Holdings Group Ltd (ASX: AHG) share price has more than doubled in 2019 so far.

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The Automotive Holdings Group Ltd (ASX: AHG) share price has opened 4.15% higher today and is trading for $3.52 this afternoon. Automative Holdings shares have now more than doubled in 2019 so far, having started the year at $1.52 – lucky investors who bought in on a New Year's whim would be looking at a 132% gain for the year so far (not including dividends).

Established in 1952, Automotive Holdings is headquartered in Perth, Western Australia, and owns a large network of new and used car dealerships around the country and is the largest motoring group in Australia. It also offers logistical services such as refrigerated transport and vehicle storage.

Why has the Automotive Holdings share price exploded this year?

It is primarily due to the stalking of Automotive Holdings by AP Eagers Ltd (ASX: APE). Despite the questionable ticker symbol, AP Eagers is another significant player in the car dealerships space – representing 27 car brands and 10 truck/bus brands across its operations.

The company has steadily been acquiring Automotive shares over the past year, which has in turn been lifting Automotive Holdings shares over 2019 so far. In July, the ACCC approved a proposed merger between the two companies, which removed any barriers to a full takeover and was also subsequently unanimously recommended by the Automotive Holdings board – further pushing up the Automotive Holdings share price.

AP Eagers announced to the market yesterday morning before trading that, as it has now crossed the 90% share ownership threshold, it will be moving to compulsorily acquire the remaining AHG shares in a share-swap arrangement (as is its right under the Corporations Act).

Is Automotive holdings a buy today?

Well, it seems like Automotive Holdings' time on the ASX is rapidly drawing to a close – an investment in the company today is really an investment in AP Eagers (as remaining AHG shares are set to be exchanged for APE shares), so you might want to check them out if you were set on buying into Automotive Holdings.

Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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