Lithia, a company listed on the New York Stock Exchange, abandoned a £460 million acquisition proposal for its British rival after failing to obtain the support of Hedin Group, Pendragon’s largest shareholder.
A mysterious bidder with a market capitalization of nearly $7 billion made an offer for Pendragon, its British rival, last month.
Lithia Motors, a company listed on the New York Stock Exchange, has submitted an offer valuing Pendragon at about £460 million at 29 pence per share.
Last week, Pendragon stated in a stock exchange notice that “a significant worldwide corporation” had made a non-binding cash offer to acquire it.
The strategy failed to advance because one of the five main owners of the British corporation refused to offer an irrevocable commitment to embrace it.
According to insiders, the investor in question was Hedin Group, which earlier this year made a 28p-per-share offer for Pendragon.
Leading shareholders stated that they were unlikely to accept any offer that was less than 30 pence per share.
As a result of Hedin’s refusal to accept the offer, negotiations with Lithia have been discontinued.
In recent years, Hedin, which owns approximately 25 percent of Pendragon, has been an outspoken critic of its board, notably on CEO compensation.
During the epidemic, Pendragon, like many of its competitors, got tens of millions of pounds in furlough payments from the government.
In the past year, the company’s shares have increased by about one-third, but on Friday they were trading at 24.7p, a significant discount from the Lithia offer.
The business operates over 150 dealerships in the United Kingdom under the names Evans Halshaw, Stratstone, and CarStore.
This year’s interest by Hedin Group in acquiring its British rival generated the intriguing possibility that Trevor Finn, who was fired from Pendragon in 2019, could return to the company.
Mr. Finn joined the board of Hedin last year.
Pendragon’s most recent bid approach coincides with substantial changes in the way new and used automobiles are sold, as well as a flurry of corporate activity among the companies that sell them.
Constellation Automotive, the privately held company behind WeBuyAnyCar and Cinch, acquired nearly 20% of the publicly traded dealer group Lookers in January.
This move followed Constellation’s multibillion-pound acquisition of Marshall Motor Group, another physical vehicle dealer, for £200 million.
At the height of the epidemic, Pendragon attempted to acquire its beleaguered competitor, Lookers but was unsuccessful.
In recent years, the sector has moved its focus to the use of technology to enhance the car-buying experience, with Cinch and its New York-listed competitor Cazoo investing tens of millions of pounds in brand-building via sports sponsorship deals.
Since the onset of the pandemic, Pendragon has eliminated 1800 jobs and closed 15 locations.
It relaunched CarStore, its standalone used-car brand, with a combination of physical shops and a digital platform in December of last year.
Lithia could not be reached for comment, while Pendragon declined to comment.
