Lithia Motors was bidder behind terminated offer for Pendragon UK dealerships, report says

Growing auto retail giant Lithia Motors appears to have made an offer to buy Pendragon, a large publicly traded auto retailer in the UK, according to an international media report this month.

Sky News, citing sources, said Lithia was the "large international corporate" that Pendragon cited in an Aug. 5 regulatory filing. The UK retailer said the bidder presented "a board-approved non-binding offer for the entire issued and to be issued share capital of Pendragon at a price of 29 pence per share, in cash."

Reuters, in an Aug. 5 report, said that the bidder was looking to offer about $558.35 million (460 million pounds) for Pendragon.

A Pendragon spokesman, in an email, referred Automotive News to the company's Aug. 5 filing and declined to comment on the identity of the bidder. Tom Dobry, Lithia's vice president of marketing, in an email to Automotive News, said that it does not comment on "any potential acquisition activity until the transaction is complete."

The proposal to buy Pendragon was contingent on receiving "irrevocable commitments" from each of the company's five major shareholders, the UK retailer said in the filing. However, Pendragon said it was unable to engage with one of the shareholders, which Sky News identified as Hedin Group.

"Given this lack of certainty, the bidder has withdrawn its non-binding offer and both parties have terminated discussions," Pendragon said in the August filing.

Sky News in March reported that Hedin Group, Pendragon's largest shareholder, tabled an offer to buy the company, a proposal Pendragon's board rejected.

Pendragon is Europe's ninth-largest dealership group by revenue, according to Automotive News Europe's 2021 Guide to Europe's Biggest Dealers, when it had 142 new-vehicle franchise points in the U.K.

The UK retailer also for a time had some dealerships in the U.S. In 2017, Pendragon announced plans to exit the U.S. after buying its first store here in 2000. Pendragon completed a multiyear divestiture of its U.S. dealerships last year.

While Lithia has been rapidly expanding in the U.S., it also has international holdings.

In August 2021, Lithia entered its first international market with its purchase of Canadian retailer Pfaff Automotive Partners.

Lithia CEO Bryan DeBoer also has hinted at the company entering other international markets, including the UK.

DeBoer has mentioned the UK — where competitors Penske Automotive Group Inc. and Group 1 Automotive Inc. have dealerships — and Australia as other possibilities for expansion.

"Those are a little less relevant at today's date," DeBoer said in a July 2021 call with analysts and investors. "Those are probably two to five years out, kind of where Canada was a few years ago. So nothing urgent."

Lithia, of Medford, Oregon, ranks No. 2 on Automotive News' list of the top 150 dealership groups based in the U.S., retailing 260,738 new vehicles in 2021.

Reuters and Automotive News Europe contributed to this report.