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Car dealer Pendragon strikes takeover deal with Denmark’s Hedin Group

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The board of one of Britain’s biggest car dealers is poised to back a takeover by a Swedish automotive tycoon in a £400m take-private deal.

City sources said that members of Pendragon’s board have indicated to Anders Hedin that they will recommend shareholders approve his 29p-a-share approach.

The board’s recommendation could be announced as early as Monday ahead of a “put up or shut up” deadline.

With executives this weekend putting the final touches to the deal, sources cautioned that a short extension to the deadline may be required before the directors’ approval is confirmed. The takeover would then need to be backed by Pendragon’s shareholders.

Separate City sources said that the deal with Hedin Group could yet be gatecrashed. There is speculation that Constellation Automotive, the group behind Webuyanycar and Cinch, could launch a rival bid.

Constellation Automotive is led by chairman Avril Palmer-Baunack, who previously led the board of Stobart. The Hampshire-based company has been at the forefront of the consolidation within the UK’s fragmented car dealership market.

It acquired listed car dealer Marshall a year ago and has taken a 20pc stake in Lookers, another of the UK’s listed dealerships.

Although a swoop on Pendragon, which operates under the Evans Halshaw, Stratstone and CarStore brands, would attract the interest of competition regulators, such a deal would only leave Constellation with around 20pc of the UK car dealership market, sources added.

Pendragon and Lookers held talks over a potential merger in May 2020. Discussions ended without an agreement.

A rival bid would likely have to be in the region of 35p-a-share, the price at which Hedin has previously indicated it would be willing to sell its current 27.5pc stake in Pendragon.

Hedin is thought to believe Pendragon can be run significantly more efficiently. It is eyeing savings by cutting out unnecessary costs. It is likely to bring in its own management team to run the business, City sources said.

Should a counter-bid not emerge, it remains to be seen whether Hedin will bring back Trevor Finn, who transformed Pendragon into one of Britain’s biggest car dealers during his 30-year stint with the company.

Mr Finn quit Pendragon in 2018 amid reports of a boardroom row. His successor, Mark Herbert lasted just three months before stepping down. Insiders claimed there had been a “difference of priorities”.

Pendragon, Hedin Group, and Constellation Automotive declined to comment.

Read More: Car dealer Pendragon strikes takeover deal with Denmark’s Hedin Group

2022-11-20 08:00:00

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