Shootout at the U.K. Corral

Shootout at the U.K. Corral

September 26, 2023 — Wow.

A shootout erupted between Lithia Motors and the Penske Automotive Group last week as both companies announced competing bids for the right to acquire Pendragon, one of the United Kingdom’s largest dealer groups.

And now, AutoNation jumped in tonight with a bid of approximately $542 million (£447 million).

Lithia Motors first entered the U.K. market in March of this year, acquiring the 50-store Jardine Motors Group from Jardine Matheson, a diversified Asian-based firm, who had built Jardine into one of Great Britain’s premier auto retailers over the last 30 years.

Lithia attempted to acquire Pendragon about a year ago but was blocked by Hedin Group, a Swedish-based investment firm owned by Anders Hedin. Hedin owns nearly 25% of Pendragon’s shares. Hedin has sometimes played an activist investor role, often at odds with current Pendragon CEO Bill Berman, a former AutoNation executive.

Hedin is also one of Europe’s largest dealer groups, with stores in Belgium, Norway, Sweden, and Switzerland.

After blocking Lithia last year, Hedin submitted its own bid for $485 million (£400 million) in December. Pendragon’s board denied Hedin’s takeover attempt. (Adding some flavor to the story is Trevor Finn, a previous CEO of Pendragon, who was reportedly ousted for governance issues, is a non-executive director on Hedin’s board).

Lithia offered another bid for Pendragon’s dealerships and fleet business last week of approximately $350 million. The deal would spin the Pendragon-owned dealer management system (DMS) vendor Pinewood into an independent joint venture, with Lithia owning just over 16%. Lithia plans to roll out Pinewood Technologies into the North American market as a DMS provider. Berman would become the CEO of Pinewood Technologies.

Two days later, the U.S.-based Penske Automotive Group, the U.K.’s largest dealer group, made a joint bid valued at $350 million (£388 million) with Hedin’s Mobility Group.

Pendragon immediately rejected the offer. Penske and Hedin revised the initial proposal to $542 million (£447 million).

No word on whether Group 1 Automotive, which has had a significant presence in the U.K. for about a decade, plans to join the party.

This story will likely play out over the next couple of weeks.

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