The 300p-per-share offer has been unanimously accepted by Dixon directors, and will give RBS an impressive combination of automotive retail and financial services businesses.
The bank - which will acquire Dixon through its Lombard North Central division - is already a leading motor finance player, and dominates the direct motor insurance market through Direct Line.
Dixon and Direct Line are already close allies through their Jamjar internet sales joint venture, and Dixon supplies cars to Lombard for its fleet leasing and contract hire businesses.
'We believe the acquisition of Dixon is a logical extension for Lombard as one of the leaders in the business finance marketplace,” says Lombard managing director Chris Sullivan. “The addition of Dixon to our vehicle management and financing operations will give us a new platform from which to grow.'
Earlier this year an RBS source said an operation like Jamjar could only operate as part of the current system with a separate dealer supplier. But he warned that with this arrangement there was always the potential for that supply of cars to be cut off. 'This gives us an unacceptable degree of uncertainty,' the source claimed. This deal removes that uncertainty.
Paul Dixon believes the Royal Bank of Scotland's financial muscle will enable Dixon Motors to strengthen its ties with key franchise partners such as PSA, Nissan, Renault and MG Rover.
Dixon, who becomes group chairman with his son Simon promoted to chief executive, says funding is “critical” to be a successful car retailer in today's business environment.
'This move gives us the security to do whatever our franchise partners want of us,' he said.
'We will have access to financial resources that we have never had before - but we will still need to show that we can get the necessary returns on any investment.'
Dixon intends to expand the £850m turnover group within its geographical heartland, “putting on weight” in Yorkshire, Humberside, Lincolnshire and Nottinghamshire.