The AP Eagers Ltd (ASX: APE) and Automotive Holdings Group Ltd (ASX: AHG) share prices are trading flat today despite the news that the competition regulator the ACCC has conditionally approved the two car dealers' proposed merger.
According to an ACCC press release the deal can go ahead on the condition that "AP Eagers sell its existing new car dealerships in the Newcastle and Hunter Valley region to a third party".
It was this particular region where the ACCC was worried about competition as it conceded: "The merger did not raise concerns nationally, or in Melbourne, Sydney and Brisbane, where the overlap between the operations of AP Eagers and AHG is limited and there is sufficient competition from other dealerships and suppliers".
The proposed deal is structured so that technically AP Eagers will acquire Automotive Holdings Group to create what will be Australia's dominant car dealership business.
According to a report in the AFR new car sales have now slumped 15 months in a row, with used car sales also a long way down on recent years. This has hit the automobile dealing industry particularly hard, however, over the long term it should return to more normal levels of growth.
