C
ar dealership agency Pendragon is ready to promote its UK motor enterprise, together with CarStore and luxurious car gross sales agency Stratsone, with the intention to deal with the gross sales administration tech it affords to different dealerships.
US large Lithia, which is valued at $8 billion (£6.5 billion) and likewise owns Jardine Motors within the UK, will purchase Pendragon’s dealerships for £250 million. Of that complete, £240 million will then be returned to shareholders through a dividend.
Pendragon will then change its title to Pinewood , the title of its supplier administration software program enterprise, which would be the company ’s focus after the sale. The firm will begin a three way partnership with Lithia to roll out Pinewood’s tech, which helps automobile salesmen handle their gross sales, throughout the “highly attractive” North American market.
Pendragon CEO Bill Berman mentioned: “The launch of Pinewood as a standalone company is a unique and exciting opportunity to create a best-in-class product for customers, which we can market globally and drive substantial value for our shareholders and in Lithia we have the perfect partner to help accelerate Pinewood’s push into the hugely attractive North American DMS market.”
Its chairman Ian Filby mentioned: “The proposed transaction provides shareholders with an immediate dividend close to the company’s undisturbed market capitalisation as well as ongoing ownership in an exciting technology company with improved growth prospects.”
Lithia will even take a 16.7% stake within the new Pinewood enterprise for £30 million, suggesting a valuation of £180 million for Pinewood. Pendragon mentioned the reworked firm may make income of £27 million by 2027.
The supply has been backed by the Pendragon board however will nonetheless want shareholder approval. It is anticipated to shut earlier than the top of the yr. Jefferies acted as adviser and joint company dealer to Pendragon on the deal.
AJ Bell funding director Russ Mould described the deal as a “takeover with a twist”.
“It’s an interesting move and one that completely changes the investment case,” he mentioned.
It comes after Pendragon launched a evaluation right into a doable sale final yr after Swedish agency Hedin Group made a £411 million supply for your complete enterprise, barely lower than the implied worth from the Pinewood deal. That supply was later withdrawn because of “challenging economic conditions”.
Andres Hedin, who owns the Hedin Group, nonetheless owns greater than 1 / 4 of Pendragon shares.
The shares surged by 31% on the again of the Lithia deal, to 24.3p, valuing the enterprise at £339 million.
Rival dealership Lookers confronted its personal takeover saga earlier this yr, agreeing a sale to Global Auto Holdings, an entity linked to privately owned Canadian automobile supplier community Alpha Auto Group, which collapsed after main shareholder Cinch mentioned it deliberate to dam the transfer.
The City has had little love for automobile dealership shares, main executives to argue that they’re undervalued.
