2:55 pm, October 2, 2023
Lithia has increased its offer for Pendragon’s car dealerships and leasing arm as the bidding war for the listed group hots up.
In terms announced to the London Stock Exchange this afternoon, Lithia Motors has increased its offer to the equivalent of 35.4p per share.
Rival bidders Hedin and Penske and the third suitors, AutoNation, both offered the equivalents of 32p per share, subject to conditions.
The new Lithia offer increases the special dividend Pendragon shareholders will receive after the asset sale of the car businesses from 16.5p per share to 24.5p – an increase of nearly 50%.
It raises the £250m originally offered for the assets to £397m.
Lithia has also waived its previous conditions regarding consents from car manufacturers which could have seen them pull out if less than 70 per cent of Pendragon’s partners didn’t back the deal.
It has also removed conditions regarding the CMA. Lithia’s offer will make the group the second biggest in the UK when it combines its Jardine Motors Group – bought for £300m in March – with Pendragon.
Jardine’s former boss and now Lithia UK regional president Neil Williamson has already been lined up to run the larger group.
Pinewood, the company’s DMS software business, will still be split off to retain Pendragon’s place on the stock market. Lithia and Pendragon will continue with their previous plan to invest in the software business separately and launch it in the States.
Lithia says it already has commitments from firms that will increase the Pinewood software business by 30 per cent ‘overnight’.
Pendragon has the backing of 28 per cent of shareholders who have given irrevocable undertakings to back the new terms, but it will still require a simple majority to get it over the line.
Friday’s vote has now been adjourned and this new offer effectively restarts the clock. The companies will send out a new circular shortly with details on when the meeting for shareholders to vote on this new offer will take place, the firm told Car Dealer.
Bryan DeBoer, Lithia & Driveway President & CEO, said: ‘Our transaction provides considerable value and certainty for Pendragon shareholders while unlocking Pinewood’s ability and massive potential as a standalone, pure-play SaaS business.
‘We have a pathway to reach completion quickly, proven experience in successfully integrating businesses and great growth opportunities for the Pendragon employees.
‘We are very excited about the strength of our strategic partnership and expanding the Pinewood business not just in the UK but around the world.’
It is not clear what Hedin, Pendragon’s largest shareholder with nearly 27 per cent, will do now.
David Kendrick, CEO of deal makers UHY Hacker Young, told Car Dealer: ‘This really is heating up. It’s certainly intriguing to watch as the various interested parties are jostling for position.
‘Lithia are the only party that are differentiating their offer by only bidding on the retail business, whereas other offers are for the entire group.
‘It really would not surprise me if the other offers now increased accordingly – as for who wins this bidding war, I couldn’t call it!’
Car Dealer revealed on Friday that Pendragon CEO Bill Berman is in line for a £5m pay day if a deal goes through. With the Lithia offer he will also keep his job at Pinewood.
