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Pendragon: Car dealership to sell UK motor business to US firm Lithia for £250m

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On Thursday, Pinewood reported revenue of £24.5m from its software unit, while its discontinued car business brought in £4.3bn in 2023.
On Thursday, Pinewood reported revenue of £24.5m from its software unit, while its discontinued car business brought in £4.3bn in 2023.

Car dealership group Pendragon has agreed to a proposed sale of its UK motor business to US dealer giant Lithia Motors for £250 million.

The deal, if approved by shareholders, will be valued at about 27.4p per share, against the 18.6p Pendragon shares were trading at on Friday.

Investors will receive a 16.5p cash dividend and retain ownership in Pinewood, its dealer management software arm, valued at 10.3p per share, plus a stake in a North American joint venture worth 0.6p per share.

The firm will remain listed on the London Stock Exchange and change its name to Pinewood Technologies.

The sale of the entire UK motor and leasing business, which includes nationwide dealer brands Evans Halshaw and premium retailer Stratstone, is expected to be completed in the final quarter of this year if it gets the green light.

The group said it had been considering potential buyers after its share price began trading lower than directors believe reflects the real value of the business.

Pendragon will roll out the Pinewood software arm to Lithia’s 50 UK sites and enter the North American market.

The deal with Lithia, which has around 340 dealerships across North America, will help Pinewood’s software unlock the North American market and aim for global expansion, it said.

Pendragon had been approached by Swedish motor company Hedin Group last September with a possible takeover offer worth £400 million, or 29p per share, but it did not result in a sale.

It came after the dealership group was forced to reject a bid from an international company in August after being unable to get hold of one of its biggest shareholders.

Pendragon chief executive Bill Berman said: “Pendragon has built one of the UK’s leading automotive retailing businesses, underpinned by a market-leading dealer management system (DMS), the quality of our people, long-standing relationships with OEMs (original equipment manufacturers) and excellent execution for customers.

“The Pendragon board considers Lithia to be perfectly placed to build on this progress.”

He added that the launch of Pinewood as a standalone company was a “unique and exciting opportunity” to create a product which can be marketed globally.

Press Association – Anna WIse