LONDON, UK: Pendragon Plc, a leading UK automotive retailer, has announced that it has agreed to sell its UK motor and leasing business to Lithia Motors, Inc., one of the largest automotive retailers in North America, for £250 million.

The deal includes Pendragon’s brands Evans Halshaw, Stratstone and Car Store, as well as Pendragon Vehicle Management, its leasing business. Lithia will pay £280 million in cash, which includes a £30 million investment in Pendragon’s remaining business, and will take over Pendragon’s debt and pension obligations.

Pendragon said the sale was the result of a strategic review it launched last year to maximise value for its shareholders. The company said it intends to return about £240 million, or 16.5 pence per share, to its shareholders after the deal is completed.

Pendragon will retain its Pinewood division, which provides dealer management software (DMS) to the automotive industry. Pendragon and Lithia have also agreed to form a strategic partnership to expand Pinewood’s presence in the UK and North America.

Pendragon said the partnership will create a pure play software as a service (SaaS) business with an accelerated growth plan. Pendragon shareholders will own about 83.3 per cent of the continuing business, which is valued at about 10.3 pence per share on a fully-diluted basis.

The deal is subject to customary conditions, including approval by Pendragon shareholders. Pendragon said the deal will provide its shareholders with an initial value of about 27.4 pence per share, compared to its share price of about 18.5 pence as of 15 September 2023.

Bill Berman, Chief Executive of Pendragon commented: “Pendragon has built one of the UK’s leading automotive retailing businesses, underpinned by a market leading dealer management system, the quality of our people, long-standing relationships with OEMs and excellent execution for customers.

The Pendragon Board considers Lithia to be perfectly placed to build on this progress. The launch of Pinewood as a standalone company is a unique and exciting opportunity to create a best-in-class product for customers, which we can market globally and drive substantial value for our shareholders and in Lithia we have the perfect partner to help accelerate Pinewood’s push into the hugely attractive North American DMS market.”

Bryan DeBoer, Chief Executive of Lithia commented: “The strategic partnership with Pinewood Technologies and acquisition of Pendragon’s UK motor and vehicle management divisions is a massive step in delivering on our longer-term growth strategy. We are excited about the great potential in Pinewood’s offering and envision our strategic partnership to further expand this SaaS business globally.

Additionally, the proposed acquisition presents a highly synergistic growth opportunity with our existing UK presence with Jardine Motors Group; provides a new adjacency with PVM; and expands our brand and geographic footprint while serving to further strengthen our existing OEM relationships.”