Pendragon, the UK’s biggest automotive retailer, will sell its dealerships and concentrate on software. This ends a turbulent period during which its largest shareholder scuppered the company’s efforts to sell itself.
Pendragon announced on Monday that US group Lithia will purchase the showrooms. Lithia already has 50 UK locations.
Lithia attempted to buy Pendragonoutright in the past, but it was denied by Sweden’s Hedin. Pendragon is owned by Hedin. Hedin tried to purchase Pendragon in the autumn of last year but was rejected.
Hedin’s ownership of less than one third makes it more difficult to block the new Lithia agreement.
This deal marks the departure of another car dealer from London’s stock exchange. There were once half a dozen London listed car dealers, but now only Vertu is left.
Lithia has agreed to take over Pendragon’s retail business and acquire a share of the Pinewood remaining business in exchange for £280mn.
They will then create a joint-venture in the US that is 51 percent owned by Lithia to sell Pinewood’s dealership technology throughout North America. The market, according to the pair, is worth £2.6bn.
Pinewood will distribute £240mn in special dividends to its shareholders following the deal.
Pinewood stated that the stake in the US joint-venture, the cash generated from the deal, and the remaining Pinewood businesses are worth 27,4p per share.
Lithia’s chief executive Bryan DeBoer said: “The strategic partnership and acquisition of Pendragon UK motor and vehicle divisions was a huge step towards achieving our long-term growth strategy.”
Bill Berman who will be the new chief executive at Pinewood and is currently chief executive of Pendragon, said Lithia would “be the perfect partner for Pinewood to accelerate its push into North America’s hugely attractive market”.