Car dealer Pendragon reverses away from takeover talks

Pendragon, the owner of the Evans Halshaw and Car Store brands, has said it is no longer in takeover talks with an unnamed potential suitor after one of its existing shareholders refused to engage with the bid.

The company said the offer, from a “large international corporate”, was not going ahead after one of its five biggest investors would not join the talks, which were supported by the other four. The bidder’s offer, priced at 29p per share, which would have valued the company at around £460 million according to the Reuters news agency. It was conditional on the backing of all the major shareholders.

Sky News reported in March that Hedin Group, the used car dealer’s single biggest shareholder, made an approach to buy the whole company that was rejected.

Demand for used cars has stayed strong after the end of Covid lockdown restrictions released pent-up demand in the sector and the prospect of tighter restrictions on the environmental performance of new vehicles boost the second-hand market. Nonetheless, the trade faces pressure from the cost-of-living crisis and soaring inflation.

According to Auto Trader, the industry magazine, the average price of a used car in July was over £17,000, a year-on-year increase of almost 20%.

Pendragon said its “market leading position” meant it continues to believe it can “capitalise on the growth opportunities and navigate near term market headwinds.” It forecasts underlying profit before tax of around £33m for the first half of its financial year.

Its shares rose over 11% to 24p in London on Friday.