Car dealership group Pendragon has confirmed that it had sought a potential merger with rival Lookers, but early talks have now ended.

In a statement, Pendragon said: “The company confirms that it held outline discussions with Lookers suggesting they might explore the potential benefits of a combination of the two businesses and how this could be attractive to both sets of shareholders.

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“While Pendragon believed that such an exploration would have proved beneficial, these early discussions have now ceased.”

The company said it remains well-positioned, having taken steps to reshape the business and to cut costs “both in advance, and as a result, of the recent events which have temporarily curtailed business activity”.

Pendragon’s 2019 financial results revealed a £117.4m loss after tax, driven by significant underlying losses in the first half of the year.

Bill Berman, chief executive of Pendragon, said at the time of publication: “2019 was a year of transition for the Group that played out against challenging market conditions, however, we returned to profitable growth in the second half and this provides us with a solid platform for the coming year. At the moment, we are closely monitoring the impact of COVID-19 on the economy as the situation continues to develop.

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“We will be providing a fuller update on the Group strategy later in the year, which will continue to be based on four strategic pillars; the opportunity to create a strong, stand-alone used car brand, an improved and stable platform in the Franchised UK Motor division, delivering growth in Pinewood and further strengthening our leasing business. I am confident in the long-term prospects for Pendragon and look forward to communicating our strategy in more detail in due course.”