US-based Lithia Motors might be set to take over Pendragon’s dealership and leasing companies in a £250 million deal which would go away Pinewood, Pendragon’s software program division, behind as a standalone entity retaining Pendragon’s inventory market itemizing.

The acquisition, which follows Lithia’s acquisitions of Jardine Motors and Arden Group already this yr, would imply Lithia would occupy second spot within the AM100, with a UK enterprise producing greater than £5 billion revenues.

Pendragon’s plc board has agreed a proposal with Lithia, topic to shareholders approval, which might dump its leasing and motor dealership companies, which embrace the Stratstone, Evans Halshaw, Automotive Retailer and Pendragon Car Administration buying and selling manufacturers, to Lithia UK Holding, the UK division of NYSE-listed Lithia.

Lithia has additionally agreed a strategic partnership to speed up Pinewood’s entry into the USA’s supplier administration system market, by means of a three way partnership, and to rollout Pinewood’s DMS to its 50 present UK websites which had been purchased from Jardine and Arden Group.

As a standalone entity, Pinewood would retain Pendragon’s London Inventory Market itemizing, altering its title to Pinewood Applied sciences plc, as a pure software program as a service (SaaS) enterprise, headed by present Pendragon chief govt Invoice Berman and chief monetary officer Oliver Mann.

Lithia will tackle all present Pendragon internet financial institution debt and pension obligations.

The deal, if shareholders again it, would give Pendragon’s shareholders a 16.5 pence per share money dividend, a retained 83.3% stake within the persevering with Pendragon software program enterprise valued at 10.3 pence per share, and an oblique curiosity within the North American three way partnership valued at 0.6 pence per share.

Pendragon stated that is the equal of 27.4p per share in contrast with the 18.5p share worth recorded on the finish of final Friday.

Shareholders accounting for 27.5% of Pendragon’s shares, together with administrators with shareholdings, have undertaken to again the deal in terms of the vote.

Lithia had lately claimed the title of North America’s largest motor retailer, following a spate of acquisitions, and it has 296 shops in 26 states throughout the USA and Canada, representing 41 new automobile manufacturers.

Bryan DeBoer, chief govt of Lithia (pictured), stated: “The strategic partnership with Pinewood Applied sciences and acquisition of Pendragon’s UK motor and automobile administration divisions is an enormous step in delivering on our longer-term progress technique.

“We’re excited concerning the nice potential in Pinewood’s providing and envision our strategic partnership to additional develop this SaaS enterprise globally.

“Moreover, the proposed acquisition presents a extremely synergistic progress alternative with our present UK presence with Jardine Motors Group; offers a brand new adjacency with PVM; and expands our model and geographic footprint whereas serving to additional strengthen our present OEM relationships.”

Ian Filby, non-executive chairman of Pendragon, stated: “Pendragon has made robust progress executing its technique lately and the enterprise has been repositioned efficiently as a digitally-enabled automotive retailer. At this time’s announcement follows an in depth strategic evaluate undertaken by the Board of Pendragon to maximise worth for our stakeholders.

“The proposed transaction offers shareholders with a right away dividend near the Firm’s undisturbed market capitalisation in addition to ongoing possession in an thrilling know-how firm with improved progress prospects.”

Following the inventory market announcement, ICDP managing director Steve Younger – one of the specialists who’ll current on the 2023 Automotive Administration Stay occasion on November 9 – stated: “The full worth of the deal is lower than the gives beforehand made by each Hedin and Lithia, so it stays to be seen how the shareholder vote goes, notably with respect to Hedin, however there was no signal of different bidders since Hedin withdrew their final supply final December, so I might assume that it’ll go forward. 

“‘Do nothing’ will not be an choice as the entire course of has been a distraction from driving the enterprise ahead in my view.

“The mixed Pendragon/Jardine enterprise beneath Lithia possession will likely be across the similar dimension as Arnold Clark, so vying for high spot within the UK.”