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Pendragon reports rising profit as takeover race hots up

27th Sep 2023 10:33

(Alliance News) - Pendragon PLC on Wednesday reported improved half-year earnings, as it mulls over a pair of takeover offers, after backing a deal to sell its entire UK motor and leasing business.

Shares in the company were 10% higher a 32.95 pence each in London on Wednesday morning, giving it a market capitalisation of GBP460.3 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.

CEO Berman added: "Earlier this month, the board of Pendragon formally concluded its strategic review of the business, which was focused on delivering full value for our shareholders. The group announced a recommended transaction with Lithia Motors that would deliver the sale of our automotive retailing and leasing operations, the launch of Pinewood Technologies as a standalone, listed company and a strategic partnership with Lithia to accelerate Pinewood's growth in North America. The board has subsequently received unsolicited approaches from Hedin Mobility Group and PAG International and from AutoNation, which it is considering in consultation with shareholders. We will provide a further update at the appropriate time."

By Eric Cunha, Alliance News news editor

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