Shares of Pendragon PLC gained over a fifth on Monday after its biggest shareholder, Sweden’s Hedin Mobility Group AB, proposed to take over the company for £400 million.
The stock of the Nottingham, UK-based motor dealership surged almost 24% following the announcement, recovering from a slump for 2022. It was last trading 18.9% higher on Monday and had so far climbed 21% this year.
Pendragon stated that it was considering Hedin Mobility’s 29-pence per share bid, which it described as “unsolicited, preliminary, and highly conditional.” The London-listed company has also urged its shareholders to make no moves at this time.
What May Be Next for Pendragon and Hedin Mobility
Should the two parties reach an agreement, it may see Pendragon’s longtime former Chief Executive and Hedin’s non-executive director Trevor Finn back in the UK company he headed for over 20 years.
However, it remains uncertain whether there will be a firm offer or terms on which the proposed bid may be founded, according to Pendragon, adding that it will make an announcement if and when appropriate.
Hedin Mobility, a Swedish investor, owned by Anders Hedin Invest AB, made the offer on September 21. It has until October 24 to decide if it will or will not proceed with its takeover bid. The deadline is still subject to change and can be extended.
Hedin Mobility already holds 26% of the British car dealer group. It recently stopped a takeover from US car dealership Lithia Motors Inc.
Automotive consultant Mike Jones stated that the offer was to be expected, considering the board’s recommendation on Lithia’s bid and the information about other major shareholders being open to the proposal.
A rival bid could be blocked by Hedin, according to Jones. Still, it would be interesting to see other offers, particularly with the sterling’s recent decline that allowed foreign investors to acquire UK assets at a discount.