Pendragon, a U.K. motor dealership, has announced its plans to sell its entire motor business and leasing business to Lithia Motors for £250 million ($309.6 million). As part of this deal, Pendragon will change its name to Pinewood Technologies PLC and enter into a strategic partnership with Lithia. The company’s Pinewood division, which operates its own dealer management software business, will become a standalone entity and focus solely on software-as-a-service.
Additionally, Pendragon and Lithia have agreed on the terms of their strategic partnership. This includes the rollout of the Pinewood business to Lithia’s existing 50 U.K. sites and the creation of a joint venture to expedite Pinewood’s entry into the North American dealer management software market. To support this partnership, Lithia will subscribe to 279.4 million new ordinary shares in Pendragon for £30 million.
The transaction is expected to provide a cash dividend to shareholders of approximately £240 million. This will consist of a cash dividend of 16.5 pence per share, a retained 83.3% ownership in the continuing business (initially valued at around 10.3 pence per share), and a direct interest in the North American joint venture (initially valued at around 0.6 pence per share).
Overall, this strategic move by Pendragon aims to streamline its operations and focus on its software business, while also benefiting from the partnership with Lithia.