Pendragon agrees £280m sale of UK motor and leasing business
Pendragon agrees £280m sale of UK motor and leasing business
- Lithia will pay £250m for the firm plus £30m stake in the Pinewood business
Pendragon shares soared after the car dealership chain revealed it has agreed to sell its UK motor and leasing businesses.
The Nottingham-based company will sell all of its car dealerships to US firm Lithia Motors for a total of £280million.
Pendragon shares were up by 24.46 per cent to 23p in morning trading on Monday.
The Nottingham-based company has agreed to sell all of its car dealerships to Lithia Motors for a total of £280million
Under the agreement, the firm will continue as a listed company and will be renamed Pinewood Technologies.
The breakdown of the agreement will see Lithia Motors pay £250million for the motoring firm and take a £30million stake in the Pinewood business
In a statement, Pendragon said: ‘The companies also agreed on the terms of a partnership including the rollout of Pinewood, the British firm’s dealer management software (DMS) business, to Lithia Motors’ existing 50 UK sites and the creation of a joint venture to speed up Pinewood’s entry into the North American DMS market.
‘The transaction is the value-maximising conclusion of the strategic review announced by Pendragon last year and the board believes that it will deliver an attractive cash dividend to shareholders of £240 million.’
Bill Berman, chief executive of Pendragon, said: ‘Pendragon has built one of the UK’s leading automotive retailing businesses, underpinned by a market leading dealer management system, the quality of our people, long-standing relationships with OEMs and excellent execution for customers.
‘The Pendragon Board considers Lithia to be perfectly placed to build on this progress.
‘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.’
The car dealership chain has seen profits row back from record highs amid rising inflation and an absence of Covid-related government support.
The motor retailer behind the Evans Halshaw and Stratstone brands revealed profits declined by over a quarter to £45.5million in 2022, down from £61.5million the previous year.
Earnings were impacted by higher marketing spending related to the relaunch of the CarStore online marketplace and the non-repeat of around £12million in business rates relief received in 2021.
Bryan DeBoer, chief executive of Lithia, added: ‘The strategic partnership with Pinewood Technologies and acquisition of Pendragon’s UK motor and vehicle management divisions is a massive step in delivering on our longer-term growth strategy.
‘We are excited about the great potential in Pinewood’s offering and envision our strategic partnership to further expand this SaaS business globally.’
DIY INVESTING PLATFORMS
AJ Bell
AJ Bell
Easy investing and ready-made portfolios
Hargreaves Lansdown
Hargreaves Lansdown
Free fund dealing and investment ideas
Interactive Investor
Interactive Investor
Flat-fee investing from £4.99 per month
EToro
EToro
Social investing with CopyTrader feature
Bestinvest
Bestinvest
Free financial coaching
Affiliate links: If you take out a product This is Money may earn a commission. These deals are chosen by our editorial team, as we think they are worth highlighting. This does not affect our editorial independence.