Car dealer Pendragon prepares for £400m offer from top investor | Business news

Pendragon owns car showrooms across the country. Pic: Pendragon

Pendragon, the London-listed car dealer behind brands such as Evans Halshaw and Stratstone, has received a new £400m deal from its largest shareholder.

Sky News has learned that Hedin Group, which owns approximately 26% of Pendragon, has made an offer of 29 pence per share for the company.

The approach is expected to be confirmed in a stock market announcement Monday morning.

Hedin – led by founder Anders Hedin – operates more than 200 car showrooms in Belgium, Norway, Sweden and Switzerland through its subsidiary Hedin Bil.

It has been an outspoken critic of Pendragon’s governance in recent years, particularly in terms of executive compensation.

Mr Hedin made an earlier offer of 28 pence per share in the spring of this year, which was rejected by the target’s board.

However, according to an analyst, the latest proposal will lead to Pendragon opening talks with Hedin Group.

At 29 pence, the new offer is worth the same as a separate offer made in the summer by Lithia Motors, a US auto dealer giant with a market value of more than $7 billion.

In a statement confirming that approach in August, Pendragon said Lithia’s offer is “a meritorious commitment with its five largest shareholders and [it had] received strong support for the proposal from four of these shareholders who were willing to sign irrevocable commitments”.

However, Hedin refused to participate, which, according to insiders, led to the termination of talks with Lithia.

The Scandinavian group’s renewed interest in a takeover of its British rival has raised the intriguing prospect of a return to Pendragon, the founder of the company, who was ousted in 2019.

Mr. Finn joined the Hedin board last year.

Hedin is advised by Deutsche Bank, while Jefferies advises Pendragon.

The London-listed company, like many of its rivals, has gone through a tumultuous period during and since the pandemic, with shares closing at 22.7 pence on Friday, giving it a market value of just £317 million.

Hedin’s existing stake in the shares of Pendragon means it would need to find around £300m to fund the takeover of the company.

Like many of its rivals, Pendragon received tens of millions of pounds in government leave during the pandemic.

The company has over 150 dealers in the UK, with other brands in its portfolio including CarStore.

The latest bidding interest in Pendragon comes at a time of significant changes in the way new and used cars are sold, and a frenzy of corporate activity among the companies that sell them.

In January, Constellation Automotive, the privately owned group behind WeBuyAnyCar and Cinch, bought nearly 20 percent of the listed dealer group Lookers.

That blow came shortly after Constellation, which has a multi-billion-pound valuation, agreed to a £200 million acquisition of Marshall Motor Group, another brick-and-mortar car dealer.

Pendragon himself came at the height of the pandemic to buy his battled rival Lookers, but was turned down.

In recent years, the industry has shifted its focus to using technology to improve the auto-buying experience, with both Cinch and its New York-listed rival Cazoo putting tens of millions of pounds into brand-building through sports sponsorship deals.

Pendragon has cut 1,800 jobs and closed 15 dealers since the start of the pandemic.

On Sunday, Pendragon declined to comment, while Hedin did not respond to a request for comment.