AutoNation drops out of fight to take over Pendragon
- Pendragon shares fell 8.7% following AutoNation’s announcement
- Hedin Mobility Group and Penske also recently dropped out of the bidding race
- Following AutoNation’s withdrawal, Lithia’s offer is now the only one left on the table
Car dealer AutoNation has pulled out of the race to take over Stratstone and Evans-Halshaw owner Pendragon.
The Florida-based company sparked a bidding war when it made a 32p per share takeover bid for one of Britain’s few remaining listed car dealers three weeks ago.
This came after Lithia Motors, North America’s largest vehicle dealer, agreed to buy Pendragon’s UK automotive and leasing business for £280 million.
Withdrawal: AutoNation has withdrawn from the race to take over Stratstone owner Pendragon
Hedin Mobility Group – Pendragon’s largest shareholder – and Penske Automotive Group responded shortly afterwards with a joint counter-proposal valuing the entire company at £447 million.
Although the couple later softened their offer, they eventually abandoned their commitment to the company, marking Hedin’s third failed takeover attempt at the company since last year.
The Sunday Times reported earlier this month that AutoNation, led by British-born Michael Manley, was considering increasing its offer, with sources claiming it had enough cash reserves for an offer of 38 pence per share.
But the company has also now withdrawn from the process, leaving Lithia’s proposal – 35.4p per share – the only one still on the table.
Manley said: “[Pendragon’s] The assets presented AutoNation with a potential opportunity to expand into a new market. However, after thoroughly examining the possibility, we decided not to make a formal offer.
“AutoNation will continue to leverage mergers and acquisitions, which may include opportunities within and outside the U.S., to expand our business portfolio in meaningful and synergistic ways and create value for our shareholders.”
Pendragon shares slumped 8.7 per cent to 31p following the announcement, making them the biggest loser on the FTSE All-Share Index.
The company’s investors are expected to vote on the Lithia deal on October 18, which requires a simple majority to pass.
If this happens, Pendragon would be renamed Pinewood Technologies and Lithia would become the UK’s second-largest car retailer in terms of annual sales, just behind Penske-owned Sytner Group.
When the initial acquisition approach was announced in September, Lithia CEO Brian De Boer said it would help expand Pendragon’s software-as-a-service business and its reach in North America.
In March this year, the company completed its purchase of Jardine Motors, known for selling luxury brands such as Aston Martin, Ferrari, Maserati and McLaren.