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Pendragon begins talks with Hedin Group after fresh takeover bid

  • Swedish group makes second bid for Pendragon at same value as offer it blocked
  • 29p-per-share offer matches that of US firm Lithia Motors
  • Deal could see a return of Trevor Finn to UK car dealership group

Time 7:05 am, September 26, 2022

Pendragon has received a fresh approach from Swedish investor Hedin Group valuing the UK car dealership group at £400m.

Hedin already owns 26 per cent of Pendragon and recently blocked a takeover bid from Lithia Motors, a US car dealership firm that was tabled in the summer.

The 29p per share offer from Hedin is the same as Lithia’s. This morning shares were trading at 22.7p.

Pendragon issued a statement to the Stock Market at 0700 this morning confirming the reports that surfaced yesterday.

It said: ‘The board of Pendragon announces that, on 21 September 2022, it received an unsolicited, preliminary and highly conditional proposal from Hedin Mobility Group AB (Hedin Group) regarding a possible cash offer for the entire issued and to be issued share capital of Pendragon at 29 pence per share.

‘The board of Pendragon is currently considering the proposal together with its financial and legal advisers. Shareholders are urged to take no action at this time.

‘There can be no certainty that any firm offer will be made, nor as to the terms on which any firm offer might be made. A further announcement will be made if and when appropriate.’

The move could see former CEO Trevor Finn return to the fold as he joined the Hedin board as a non executive director in January 2021.

Hedin operates 200 dealerships in Belgium, Norway, Sweden and Switzerland via its Hedin Bil subsidiary.

The Times reported that Hedin is being advised by Deutsche Bank, and Jefferies is advising Pendragon.

Hedin attempted a takeover offer for Pendragon in March with a 28p per share offer. The secret offer was rejected by the board and shareholders weren’t told about it.

At the time, it was believed Hedin would make a second offer.

Mike Jones, automotive consultant and the compiler of the Car Dealer Top 100 list of most profitable dealers, said the move came was not a shock.

He said: ‘This bid comes as no surprise given the recommendation of the board of the Lithia offer and the revelation that the other major shareholders were amenable to the offer.

‘Whilst any rival bid would be complicated by Hedin’s shareholding it will be interesting to see whether alternatives arrive, particularly with the recent depreciation of Sterling making UK assets cheaper for overseas buyers.’

David Kendrick, partner at accountancy firm UHY Hacker Young, added: ‘This is a very interesting development after Hedin blocked the Lithia approach a few weeks back.

‘This potential takeover has been bubbling for some time now and with PLC valuations as low as they are, it represents extremely good value. It will be one to watch over the next few days for sure.’

Last week, Pendragon revealed its underlying pre-tax profit fell slightly to £33.5m in the first half of 2022.

Despite the dip, the Car Dealer Top 100 outfit saw revenues rise and margins improve during a strong start to the year.

Group revenue totalled £1.85bn in the six months to June 30, a 1.6 per cent improvement on the same period in 2021.

Despite that, the firm’s underlying pre-tax profit took a 4.6 per cent hit, falling from £35.1m in H1 2021 to £33.5m in the first half of this year.

The group also said it was in ‘advanced discussions’ to be the lead partner for new Chinese brand BYD.

James Baggott's avatar

James is the founder and editor-in-chief of Car Dealer Magazine, and CEO of parent company Baize Group. James has been a motoring journalist for more than 20 years writing about cars and the car industry.

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