Pendragon receives £400mn takeover offer

UK car dealership Pendragon has received a £400mn takeover offer from its largest shareholder, pushing up shares in the London-listed UK car dealership by a fifth.

Hedin Mobility bid 29p a share in cash for the group, which includes the Stratstone and Evans Halshaw brands, Pendragon said on Monday.

If successful, the deal would restore Pendragon’s longtime former chief executive Trevor Finn, who is a non-executive director at Hedin, to the car dealership that he led for more than 20 years. Pendragon said there was no certainty of a final offer.

Finn, who founded the company and expanded it through acquisitions to become one of the largest players in the market, was ousted in 2019.

The group’s shares rose 20 per cent to 27.44p in early morning trade on Monday in London. The shares have risen 21 per cent this year.

Hedin, which operates showrooms in Sweden, Switzerland, Norway and Belgium, owns about a quarter of Pendragon’s shares. It has until October 24 to decide whether to go ahead with its offer.

Pendragon, which makes about 90 per cent of its sales from car sales, has benefited from supply chain disruptions and a computer chip shortage that hit global vehicle production and limited the stock available.

The shortage has pushed waiting times for new cars to up to a year and sent the price of used vehicles above new ones, benefiting groups such as Pendragon, and reversing the typical model of cars devaluing over time.

The offer marks the latest potential takeover in a sector that has been rife with buyouts in the past two years.

Constellation, the owner of Cinch and British Car Auctions, took over Marshall Motor last year, and has built a stake in Lookers, one of the UK’s largest car retailers. Cambria, another retailer with a focus on luxury brands, was taken private last year.

Retailers have been struggling since the coronavirus pandemic, forced into cutting jobs and shifting more focus online as customers shied away from showrooms. Pendragon has cut about 1,800 roles in the past two years, and closed 15 dealerships.