American automotive giant Lithia Motors has reached an agreement to acquire the car dealership businesses of UK dealer group Pendragon for £280m. As part of the deal, Pendragon’s dealer management software business, Pinewood, will be spun off into a separate company called Pinewood Technologies Inc. Lithia’s offer comprises £30m for shares in Pinewood. The deal values Pendragon’s motors business at 16.5p per share and will allow shareholders to retain an 83.3% stake in the software business. Lithia will also assume Pendragon’s net bank debt and pension obligations. After costs, Pendragon plans to return £240m to its shareholders. The deal is subject to approval from shareholders, with several key shareholders, including Schroder Investment Management and Sir Nigel Rudd, providing “irrevocable undertakings” to support the transaction.
Lithia Motors’ acquisition of Pendragon’s car dealerships and leasing businesses will significantly expand its operations in the UK. The move comes after earlier reports suggested that Lithia was considering a bid for automotive retailer Lookers. Bill Berman, CEO of Pendragon, believes that Lithia is well-placed to build on the progress made by Pendragon, particularly with the launch of Pinewood as a standalone company. Berman will continue to lead Pinewood, and Lithia will implement the software in its 50 existing UK businesses. Furthermore, Lithia will form a joint venture with Pinewood Technologies Inc to enter the North American market. Both parties will invest £10m each to facilitate the launch, with a target of achieving an EBITDA profit of £27m for Pinewood by 2027.
Overall, the acquisition of Pendragon’s car dealership businesses by Lithia Motors represents a significant step in the company’s long-term growth strategy. It will expand its brand and geographic footprint and strengthen its existing relationships with original equipment manufacturers. The deal also provides Pendragon shareholders with an immediate dividend and ongoing ownership in Pinewood Technologies Inc, a promising technology company with improved growth prospects.
Sources:
– “Lithia swoops on Pendragon in £280m deal for car-dealership business” – AM Online
– “Lithia Motors set to acquire Pendragon’s US motor management division for £280m” – Fleet News