27th Sep 2023 13:14
(Alliance News) - Pendragon PLC's robust half-year results achieved amid a backdrop of tough market conditions helped justify the bid interest in the motor dealer.
There are three proposals for Pendragon to mull over. Two bids are for the company to be acquired in its entirety. A third is for the firm to sell its entire UK motor and leasing business.
The latter proposal has been accepted, but with Pendragon shares still on the rise, investors may believe there could be more twists and turns in the race to acquire the motor dealer.
Shares in the company were 11% higher a 33.00 pence each in London on Wednesday afternoon, giving it a market capitalisation of GBP461.2 million.
The automotive retailer said revenue in the six months to June 30 rose 13% to GBP2.09 billion from GBP1.85 billion a year prior. Pendragon's pretax profit increased 11% to GBP36.4 million from GBP32.9 million.
"I'm pleased to report a strong trading performance in the first half, with revenue and profits up across all our divisions despite a challenging backdrop. We delivered strong volume growth for both new and used vehicles during the period, while a robust operational performance supported healthy margins in our UK Motor division. Pinewood continues to make very encouraging progress, with investments into product innovation and the delivery of new functionality helping to drive user growth and higher average revenue per user. I'd like to thank all our associates for their hard work delivering another strong set of results," Chief Executive Bill Berman said.
Like a year prior, Pendragon decided against an interim dividend.
Though Pendragon last week Monday said it agreed to sell its entire UK motor business and leasing business to Lithia Motors, its fate is far from certain.
That deal would mean it will operate as a standalone Pinewood business, making it a pure-play software as a service business. Pinewood is a dealer management system.
Since then, however, Pendragon has attracted takeover interest. On Friday, it revealed that it received a revised takeover tilt from Hedin Mobility Group AG and PAG International Ltd, or Penske.
The new offer is for 32 pence per share, up 14% from the 28p per share offered previously, which Pendragon had rejected, saying it fundamentally undervalued the company.
The new offer values Pendragon at around GBP447.0 million.
Pendragon is also mulling another 32p per share bid. AutoNation Inc made an unsolicited proposal, Pendragon said late Tuesday.
Pendragon shares currently sit above 32p.
AJ Bell analyst Russ Mould commented: "Strong first half results from Pendragon, against a difficult market backdrop, help explain why there’s a bid battle afoot for the car retailer. The three-way race to buy the business could leave shareholders as the major winners."
By Eric Cunha, Alliance News news editor
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