YOU can’t accuse Trevor Finn of lacking chutzpah. “My approach is simple,” says the Pendragon boss. “Steady, aim, fire. You don’t want to get that in the wrong sequence, of course...”
He chuckles. This is pure Finn. His Nottingham-based Pendragon group, Britain’s biggest car dealer, is immersed in one of the most extraordinary bid battles for years.
Having been outbid for Britain’s No3 car dealer Reg Vardy by a smaller rival Lookers, Finn returned a fortnight ago with a proposal that stopped everyone in their tracks.
He wanted a three-way merger that would fold Lookers and Vardy into Pendragon, creating a company with a market value of £1.4 billion. But he faced bitter opposition. Then on Friday afternoon he increased his bid for Vardy again.
Lost his nerve? Perhaps. The son of a Hull trawlerman, Finn, 48, doesn’t baulk at setbacks. He just works his way round them.
“It’s mechanical thinking,” he grins, warming to his metaphors. “You go from A to B to C to D and, if disassembling, it’s the reverse. And when you see ways of improving processes, you do it.”
That’s how he built up £3.2 billion-turnover Pendragon from scratch, doing every job — he started at 15 as a mechanic at the Co-op. And that’s why, instead of immediately raising his bid for Vardy when Lookers came in, he thought up an audacious alternative.
It relied on Vardy’s shareholders accepting his lower bid, and Lookers’ shareholders backing him over their own management, in the hope of greater gain for all in the long term. That option of putting the three together, say his team, is still open.
Sitting in his Aston Martin showroom in London’s Berkeley Square, Finn brushes aside any doubts about his tactics and fizzes with enthusiasm for his three-way proposal.
“The three-way merger was one of the scenarios we had looked at when we did what-if on the Vardy bid, and the more we looked at it, the more it made sense from a commercial point of view, a strategic point of view and a financial point of view. That’s three ticks. It’s not straightforward, but once people pause and look at the facts, there’s mileage in this.”
His eyes glint behind frameless glasses. Short and chunky, with a large head on slight shoulders, the soberly suited Finn looks more paper pusher than salesman or mechanic, but in his flat East Midlands tones, he is an engaging persuader.
He is certainly not, as king of Britain’s car dealers, the brash boss you expect. For a start, he is far more interested in what goes on outside his world than many driven entrepreneurs — he has a need to know, and fires back as many questions about you as you can ask about him.
He also chats knowledgeably about management and psychology, and generally avoids flashing his wealth. He says his only indulgences are jukeboxes (he has two — he loves the mechanics of them) and an imported Ford GT sports car.
Behind it all lies his self-starter’s desire to ask, why not? Hence the three-way merger offer. You don’t see such proposals very often — but that, argues Finn, is because he is a builder of businesses and not a City expert.
“Naivety sometimes generates creativity,” he says. “Like when someone joins our company, they see a lot of things that people who have been there a long time don’t. The creativity of it doesn’t mean it is not logical or rational.”
Well, maybe. Finn has been buying companies for a long time now, and with a financial skill that stretches back to Pendragon’s days as part of the Williams conglomerate built up by Sir Nigel Rudd.
Rudd, one of the most experienced non-executive directors, still sits as Pendragon’s chairman. Citing naivety is stretching it: the complex, three-way merger had the fingerprints of two seasoned pros all over it.
“We’re both claiming it,” laughs Rudd, when asked who thought it up.
And Finn knows the ropes. He has run his firm as a public company since it demerged from Williams in 1989. He answers to shareholders, not to himself, despite owning 3m shares in the firm (just over 2%).
It’s their money he has used to build the company and buy rivals in the downturns, swiftly incorporating them into Pendragon. Harrogate-based CD Bramall was Finn’s last big acquisition, for £230m in 2003.
Pendragon now sells a variety of cars — Aston Martins, Jaguars, Fords, Vauxhalls and more — using a clutch of dealer brands, including Stratstone for the posh marques and Evans Halshaw for the mainstream. It has also built up business in Germany and America.
At the same time, Finn has built his own reputation. He runs a ruthlessly efficient organisation and is quick to see the profit potential in all sides of the business: used and new cars, fleet, contract hire, property, finance, scale.
“He’s just very astute,” says Peter Webb, chief executive of Unicorn Asset Management and a Finn backer. “He knows there is still considerable potential out there. And the City is 100% behind him.”
That’s why he is running at Vardy and, belatedly, Lookers. Finn wants to be the leader as Britain’s fragmented dealership structure consolidates. Even if he pulls off the three-way “merger”, the enlarged company would still have only 6% of the market, he claims.
When we met, it was still unclear what he would end up with. Vardy shareholders should leap behind his bigger bid — he already has an option on chief executive Sir Peter Vardy’s 16.9% stake at a lower price. And City institutions that own shares in all three companies may want Finn to complete the set.
What’s clear is that his three-way merger proposal was too complex for many. And the Lookers’ counter-bid for Vardy had already thrown up some interesting wrinkles. Royal Bank of Scotland, for instance, turned up as financing bank for both Pendragon and the hugely leveraged Lookers bid — a move that infuriates Finn’s team. How is that relationship going to pan out? And isn’t Pendragon due to announce results imminently? The industry wants to know if Finn can pull out decent figures in a hard market with new-car registrations falling.
And what of the comments that Vardy’s staff don’t want to be subsumed by Pendragon’s bigger-is-better corporatism? “I don’t think they are resistant to Pendragon,” says Finn. “I think change is scary for people, but you always need to have re-evaluation. The European Commission has given retailers commercial independence from manufacturers and that allows us to be more efficient. The market is going to change whether I or anyone else likes it, and we have a chance to be part of that change.”
That logical plausibility has been a Finn trait since his early days as a mechanic, when he stood in for salesmen and was noticed by managers for his potential. What’s puzzling is how someone who is clearly so bright can have left school with no qualifications at all.
Others allude to Finn’s tough upbringing, middle child of three, with little money, and his trawlerman father away for weeks at a time. Finn says simply that training as a mechanic seemed a better option than staying at school.
By the time Rudd met him in 1981, Finn was — at 23 — the youngest-ever general manager of a BMW dealership. “He was one of the fastest thinkers I have met,” says Rudd. “He would have been a fantastic derivatives trader, and he had a wonderful ability to lead.”
The Williams group bought the dealership, gave Finn more to oversee, and eventually developed a whole division that was floated off with Finn, aged 32, at the helm. Rudd and Finn remain close. Rudd says his protege is an excellent all-rounder now, who has turned his lack of formal education into a considerable advantage.
“He had an early start in working out what people are about,” says Rudd, who also left school at 16. “And he got hit on the head occasionally. Bright people who stay at school just don’t learn to duck and dive as quickly.”
Finn’s steeliness is pretty well concealed now. He is devoted to the business he has built, pouring all his money back into buying Pendragon shares. He could have taken the business private in the 1990s, and made himself hugely wealthy, but didn’t.
What does he spend his money on? Not much, he shrugs, sports car, jukeboxes, the house in Derbyshire where he lives with his wife, maybe books and magazines for self-improvement. “I have just taken out a subscription to Scientific American Mind,” he grins.
For the moment, however, Finn will be pre-occuppied with Vardy and Lookers. Both have extraordinary general meetings scheduled this month to sort out the bids and counter-proposals. Vardy may be in the bag by then and Finn may not have to convince anyone about the efficacy of his “merger” proposal. To opponents, it looked like “a takeover on the cheap” anyway. It was pretty clear who was going to end up with control. He wanted to head the proposed entity, surely? Finn looks offended. “We haven’t even had the conversation about management,” he says. “If it’s a better structure to have me out of it, then I would be receptive to that. Anyway, it isn’t principally about who does what job, it’s about maximising the value of the three firms.”
Which begs the question, what will Finn do next? Take a run at Lookers? Throw up more “merger” proposals? “I put the merger proposals on the table so people could think about it,” he says. “Lookers’ shareholders didn’t realise they had this choice.”
Then he adds: “One of the reasons I put it out was because we did not want to be seen sneaking around the back. We’ve had meetings with shareholders who have investments in all three companies. I can’t comment on what went on, but I can tell you that after we had the meetings, we went ahead.”
So read into that what you will. For a man who likes to move smoothly from A to B to C, Finn seems to have got himself in a tangle, and then bought himself out of it.
Vital statistics
Born: July 1, 1957
Marital status: married with three children
School: Wolfreton, Hull
First job: apprentice technician, East Riding Co-op
Salary: £795,000 incl bonus
Home: Derbyshire
Car: blue Ford GT
Favourite book: The Seven Habits of Highly Effective People, by Stephen Covey
Favourite music: Bittersweet Symphony, by The Verve
Favourite film: The Usual Suspects
Favourite gadget: iPod Nano
Last holiday: Orlando
Interests: cars, jukeboxes
Working day
THE Pendragon chief executive wakes at 7.15am at his Derbyshire home. “It’s an interesting place,” says Trevor Finn, “a converted set of workshops where in the 1800s the guy who owned the main house next door built a narrow-gauge railway.”
Finn doesn’t eat breakfast. “In the car, straight to the office, 20-minute drive,” he says. He arranges meetings back-to-back, leaving other days free for travelling.
Four people report direct to him. “Martin Casha, who I’ve worked with for 25 years, runs the business operationally, so I can forward-face.”
He eats a sandwich at his desk for lunch, and usually won’t finish work until 7pm. “Then there are always functions in the evening to attend.” And the “world down in London” needs his attention, too.
Working space
TREVOR FINN works from a desk in an open-plan office on the first floor of Pendragon’s new headquarters, a modern, two-storey building at Annesley business park outside Nottingham. “It’s built on a piece of land we bought five years ago when we had the site next door. We’ve got our customer-support centre there.”
Finn’s office has 40 people in it. He sits opposite his PA and allocated graduate trainee.
“The grads work with all the directors for the first 12 months of their programme and are then placed out with the businesses,” he says. “They get impregnated with the right attitude and can put that straight into the businesses.”
Finn organises his desk with scrupulous tidiness: papers to the right, laptop straight in front, telephone to the left. “Yes, I am tidy. Assemble, disassemble — that’s me.”
