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Pendragon PLC on Monday said it has agreed to sell its entire UK motor business and leasing business to Lithia Motors Inc, its North American rival. Pendragon is a Nottingham, England-based automotive retailer. Its shares jumped 27% to 23.50 pence each in London on Monday morning. Pendragon said it will sell Pendragon NewCo 2 Ltd, its entire UK motor business and leasing business, to Lithia UK Holding Ltd. Lithia UK Holding is a subsidiary of Lithia Motors. The UK motor business consists of Evans Halshaw, Stratstone & Car Store, and Pendragon Vehicle Management. The arm will be sold at an ‘attractive valuation’ of £280 million, Pendragon said. This includes a £30 million subscription for shares in Pendragon. Following completion of the disposal, Pendragon will operate as a stand alone Pinewood business, making it a pure-play software as a service business. It will retain existing listing on the London Stock Exchange and change its name to Pinewood Technologies PLC. In line with this, Pendragon and Lithia Motors have also agreed the terms of a strategic partnership for the the rollout of Pinewood. Pendragon’s DMS will be rolled out to Lithia’s existing 50 UK sites. Pendragon added that the joint venture will ‘accelerate Pinewood’s entry into the highly attractive North American DMS market.’ It also believes the transaction will be ‘value-maximising’ to its shareholders, with £240 million in cash dividends. Shareholders will receive a dividend of 16.5 pence post completion, as well as a retained 83.3% ownership in the continuing Pendragon business and an indirect interest in the North American joint venture valued initially at about 0.6p. Non-Executive Chair Ian Filby said: ‘Pendragon has made strong progress executing its strategy in recent years and the business has been repositioned successfully as a digitally-enabled automotive retailer. Today’s announcement follows an extensive strategic review undertaken by the board of Pendragon to maximise value for our stakeholders. 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.’ Pendragon was the subject of a £400 million takeover bid in July 2022 from Lithia Motors. However, the proposal was withdrawn after Hedin Mobility Group AB blocked it. Hedin is a Swedish privately-owned investment company investing in businesses mainly related to the vehicle industry. Hedin is Pendragon’s largest shareholder. Copyright 2023 Alliance News Ltd. All Rights Reserved.
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