6:28 am, December 29, 2023
The Financial Conduct Authority (FCA) has cleared the path for Pendragon to sell its dealerships and leasing business to American giants Lithia.
In an announcement to shareholders made after markets closed yesterday (Dec 28), Pendragon said the FCA had ‘now been satisfied’ over the change of control to Pendragon Finance and Insurance Services Ltd.
The news smooths the path for the £397m offer from Lithia to complete on January 31.
However, there may be a slight delay to the special 24.5p per share dividend promised to shareholders.
The firms say they now expect to pay this in ‘Q1/Q2 2024’. Previously it was scheduled to be paid out in the first quarter.
Pendragon – which operates the Stratstone and Evans Halshaw dealership chains – said some conditions relating to the reorganisation and pensions are still outstanding, but are ‘expected to be satisfied on or before January 31’.
Lithia won a four-horse race to buy Pendragon’s assets in a bidding war this autumn.
It beat rival offers from Hedin, who had teamed up with Sytner owners Penske Automotive to make a joint bid, as well as seeing off an offer from America’s biggest dealer group, AutoNation.
Lithia’s bid will see it take over Pendragon’s dealer group and leasing business and combine them with the luxury car dealer group Jardine, which it bought earlier this year for £300m.
The larger business will be run by Jardine’s current boss Neil Williamson.
The deal will see Pinewood, the group’s dealer management software arm, hived off to take Pendragon’s place on the London Stock Exchange, led by current Pendragon boss Bill Berman.
Both parties have pledged to invest in the software business and Lithia believes it can increase the DMS business by at least 30% thanks to promises it’s already received.
Pendragon said in its announcement yesterday: ‘The board strongly believes that the growth prospects for the company will be enhanced materially as a result of becoming a standalone business, as well as through the strategic partnership with Lithia.’
The announcement also explained Lithia’s Chris Holzshu, chief operating officer, and George Hines, chief technology officer, will be appointed to the board of the new listed business.
Current chief financial officer Mark Willis will step down and be replaced by new CFO Oliver Mann. This will take place when the disposal completes.
Lithia’s offer was backed by 99% of those shareholders who chose to vote in October.
Hedin, which at the time owned 27% of Pendragon, abstained. It has been slowly selling off its shares since the deal was announced.
