US car dealer Lithia Motors revealed as mystery auctioneer for Pendragon | Business newsletter

A US car business giant with a market value of more than $7 billion is a mystery contractor that made an offer last month to Pendragon, its UK peer.

Sky News has learned that Lithia Motors, which is listed on the New York Stock Exchange, has placed a bid of 29p/share valuing Pendragon at around £460m.

City sources said Friday that Lithia is being consulted by Goldman Sachs about its interest.

Pendragon revealed in a stock exchange announcement last week that “a large international company” presented a non-binding, board-approved cash offer for it.

This method cannot progress further because one of the UK’s five largest shareholders will not make an irrevocable commitment to accept it.

Insiders said the investor in question was Hedin Group, which itself made 28p/share offer for Pendragon earlier this year.

Top shareholders said they were unlikely to accept any bid unless it was worth more than 30p/share.

Negotiations with Lithia were terminated due to Hedin’s refusal to join with the offer.

Hedin, which owns about 25pc of Pendragon, has been a major critic on its board in recent years, especially executive salary.

Like many of its competitors, Pendragon has received tens of millions of pounds from the government during the pandemic.

The company has seen its shares rise by almost a third in the past 12 months, although on Friday it was trading at 24.7p, a meaningful discount to the Lithia bid.

The company operates more than 150 dealers across the UK under the Evans Halshaw, Stratstone and CarStore brands.

The Hedin Group’s interest this year in a takeover by its British rival has raised the enticing prospect of a return to Pendragon for Trevor Finn, the company’s founder, who was ousted in 2019 .

Mr. Finn joined Hedin’s board last year.

The latest bid approach for Pendragon comes at a time of significant changes in the way new and used cars are sold and business turmoil among the companies that sell them.

In January, Constellation Automotive, the privately owned group behind WeBuyAnyCar and Cinch, bought nearly 20pc of the dealer group listed as Lookers.

That comes shortly after Constellation, which has a multi-billion pound valuation, agreed to a £200 million takeover of Marshall Motor Group, another de facto car dealership.

Pendragon itself made an approach to buy Lookers, its arch-rival, at the height of the pandemic, but was rejected.

In recent years, the industry has shifted its focus to using technology to improve the car buying experience, as both Cinch and its New York-listed rival Cazoo are investing tens of millions of pounds. into brand building through sports sponsorship contracts.

Pendragon has cut 1800 jobs since the pandemic began and closed 15 stores.

Last December, it relaunched CarStore, its independent used car brand, with a combination of physical locations and digital platforms.

Pendragon declined to comment, while Lithia could not be reached for comment.