THE family behind North-East car dealership Reg Vardy are looking forward to a multi-million pound windfall after agreeing to sell the company to one of its closest rivals.

Chief executive Sir Peter Vardy, the son of the founder, Reg, and other members of the family, have agreed to sell their 27.2 per cent share of the company to Pendragon.

The offer of 800p a share, which will be recommended to remaining shareholders, is an improvement on Pendragon's earlier offer of 750p.

It values Sunderland's Reg Vardy at £450m and earns the Vardy family nearly £125m. Nottinghamshire-based Pendragon, the UK's largest car dealer, faced competition for Vardy, and the prospect of a bidding war sent shares in Vardy to an all-time high of 794p on Friday.

The other parties - rumoured to include rival dealer Lookers - offered more than £422m, but Pendragon won the battle with its improved bid. The deal follows Pendragon's acquisition of CD Bramall in 2003 for £230m.

Its portfolio includes specialist and luxury franchises, including BMW, Ferrari, Land Rover and Mercedes.

Reg Vardy chairman John Standen said: "Pendragon's offer represents an attractive price for Reg Vardy shareholders.

"Also, it reflects the considerable contribution of all the Reg Vardy colleagues over many years to create a major force in UK motor retailing.

"It should provide the opportunity for Reg Vardy colleagues and customers to benefit from being stakeholders in what would undoubtedly be the UK's largest motor retailing group in a fast-changing market place."

Pendragon chairman Sir Nigel Rudd said: "Pendragon has pursued a strategy of growth through significant acquisitions and, consistent with this, we are pleased to announce this recommended offer for Reg Vardy.

"We believe that the combination of the two companies will strengthen relationships with principal manufacturer partners, lead to improved returns for our shareholders and provide greater opportunities within the enlarged group for all team members."

Reg Vardy, which has about 100 dealerships, including BMW, Citroen and Fiat, made profits of £43.9m in the year to April 30 after reporting strong sales.

The company, one of the region's largest, was founded in the 1920s, when Reg Vardy began a haulage business in Houghton-le-Spring, Wearside.

Today, it employs more than 6,000 people and sells about 200,000 cars a year.