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AutoNation Joins Bidding War for Pendragon
AutoNation Inc., one of the leading auto retailers in the United States, has entered the fray in the bidding war for Pendragon, the prominent auto retailer in the United Kingdom. Just a week ago, Pendragon seemed set to be sold to Lithia Motors Inc., but now AutoNation has thrown its hat into the ring.
In a regulatory filing on Tuesday, Pendragon announced that it had received an unsolicited proposal from AutoNation to acquire the company for 32 pence, or 39 cents, per share in cash.
AutoNation, also filing a regulatory document on Tuesday, confirmed the submission of a non-binding preliminary proposal for Pendragon. However, they emphasized that there is no certainty as to whether they will make a binding offer for the company.
AutoNation stated that they will provide a further announcement if and when appropriate. A spokesperson for AutoNation referred Automotive News to the 8-K filing for more information.
According to Reuters, the value of AutoNation’s offer is estimated to be $544.2 million.
Pendragon, in response, stated that their board will consider the proposal and provide an update in due course.
Lithia Motors and Penske Automotive Group Also in the Race
In a surprising turn of events, Lithia Motors Inc. had initially planned to purchase Pendragon’s dealership and fleet businesses for $350 million. This proposed deal included the transformation of Pendragon’s dealership management system, Pinewood, into a standalone software company called Pinewood Technologies. Lithia would have gained a one-sixth ownership stake in this new entity and planned to form a joint venture with Pinewood to bring their dealership management system to North America.
However, Pendragon had scheduled a shareholders meeting for October 6th to obtain approval or rejection of Lithia’s proposal.
In the midst of this, Penske Automotive Group Inc., in partnership with Sweden’s Hedin Mobility Group, made a joint offer to acquire Pendragon. However, this bid was turned down by Pendragon.
Undeterred, Penske and Hedin returned with a revised offer of 39 cents per share, up from the initial 35 cents per share. The value of this bid, according to Reuters, is approximately $548 million. Pendragon is currently considering this proposal.
Meanwhile, AutoNation stands out as the lone bidder in its pursuit of Pendragon.
Possible Implications of the Bidding War
If AutoNation’s bid is successful, it would become the fourth publicly traded auto retailer with dealerships in the United Kingdom, joining the ranks of Lithia, Penske, and Group 1 Automotive.
Pendragon currently operates 160 retail locations across the U.K., with a majority of them being new-vehicle dealerships.
Representatives from Lithia and Penske declined to comment, but Rob Kurnick Jr., president of Penske Automotive Group, acknowledged that Pendragon is a longstanding peer in the industry. He mentioned that Penske has a significant presence in the U.K. market and closely monitors all the major players in the space.
AutoNation, headquartered in Fort Lauderdale, Florida, is the second-largest dealership group in the U.S. according to Automotive News’ list of the top 150 dealership groups. In 2022, the company recorded retail sales of 229,971 new vehicles. In comparison, Lithia Motors takes the top spot on that list, with Penske Automotive Group ranking third.
Mark Hollmer and Reuters contributed to this report.