7:48 am, June 23, 2023
Swedish car dealer group Hedin has said it is considering issuing bonds to help raise around £110m to fund ‘potential acquisitions’.
Experts believe the highly profitable car dealer group – which made £165m last year – is preparing a war chest for further deals which could include another approach for Pendragon.
Since the announcement this week that Lookers is set to be taken private by a Canadian car dealer group for £465m, talk of further deals for its fellow listed businesses has been rife.
In an announcement on Wednesday, Hedin Mobility Group said it had asked bankers to test the waters on a bonds issue of 1.5bn SEK, worth around £110m.
Hedin said the proceeds would be used to ‘finance general corporate purposes’ which included ‘acquisitions and investments’. It did not respond to a request for comment from Car Dealer.
‘Why would a highly profitable car dealer group like Hedin want to raise so much money via bonds if they weren’t planning on buying something big,’ one industry expert told Car Dealer.
‘They are well funded and acquisitive already. This looks like they’re getting ready for another crack at Pendragon when the court case is settled.’
Hedin Group placed a 29p per share bid for listed UK car dealer Pendragon at the end of last year, but backed out in December blaming ‘market conditions’.
City rumours at the time suggested Hedin’s retreat was in fact more to do with it being spooked by a looming court case Pendragon’s Pinewood division is facing.
Pendragon is facing a £260m claim from a reseller of its Pinewood technology, as revealed by Car Dealer in January.
The row relates to the software’s launch in Japan and a case – number HT-2022-000244 – is set to be heard in the Technology and Construction Court, a division of the High Court.
No new documents have been uploaded by either side since December, but the case appears to still be active.
At the time, Pendragon said it would not comment on ‘live litigation’ and despite repeated requests for an update from Car Dealer on the status of the case, the listed business has not responded.
Fresh bid
Experts believe that it is only a matter of time before Hedin comes back with a bid for Pendragon and the bonds issue could be the firm getting its ducks in a row to fund it. Shares in Pendragon were trading at 16.8p this morning.
‘No one in their right minds would bid for a business with a potential multi million pound liability hanging over its head – once that case is settled Pendragon will be back in play,’ one city source said.
Hedin is the king maker in any Pendragon deal and has already said it will block any rival bid for the car dealer group. It owns 26 per cent of the firm and stopped American giants Lithia buying the business last summer.
Liberum analyst Sanjay Vidyarthi said he thinks it’s only a matter of time before Pendragon is approached by Hedin again. He told investors in a note earlier this week that the Lookers deal ‘looked low’ and that bids for Pendragon and Vertu are likely.
David Kendrick, CEO of UHY Hacker Young, said Hedin raising the cash now made sense.
He told Car Dealer: ‘It’s all a guessing game at the moment, but there is huge international interest in the market.
‘Hedin is a big player and could scale at any level. Having the firepower to move quickly and execute would make them an appealing force in a transaction process, therefore it’s a shrewd move regardless of the target.’
Hedin has already got a foothold in the UK, buying four Mercedes dealers from Mercedes Retail Group in November.
At the time, Hedin boss Anders Hedin hinted this was just the first step of its expansion into the UK.
He said: ‘Through this acquisition, we take our first step into Europe’s second largest car market and establish a strong foothold for further growth.’
