MEDFORD,
Ore., Sept. 18, 2023 /PRNewswire/ -- Lithia
& Driveway (NYSE: LAD, "Lithia") announced today that it
intends to enter a strategic partnership with Pinewood Technologies
and acquire the UK motor and fleet management divisions of
Pendragon plc ("Pendragon"), the UK's third largest automotive
dealership group. This acquisition will round out Lithia's presence
in the UK market and is expected to generate over $4.5 billion USD in annual revenues.
Transaction Overview
About the
Transaction
Lithia and Pendragon have signed agreements to
enter a strategic partnership with Pinewood Technologies and for
Lithia to acquire Pendragon's UK motor division and vehicle
management division.
Investment in Innovation
- As part of the agreement, the ongoing Pendragon business,
comprised of the Pinewood DMS platform, will remain listed on the
London Stock Exchange under the name Pinewood Technologies plc
("Pinewood Technologies") and will become pure play software as a
service (SaaS) business with its profitable Pinewood dealer
management system
- Lithia's UK operations will grow their digital capabilities by
adopting the Pinewood technology platform across all locations
- Additionally, Lithia and Pinewood Technologies, through a joint
venture, will co-develop automotive technology solutions to
capitalise on the North American market opportunity
- Lastly, Lithia will take a 16.7% ownership in the remaining
Pinewood business at completion of the transaction
Diversification
- The acquisition of Pendragon Vehicle Management ("PVM")
immediately adds a highly profitable fleet management services
business to Lithia
- This business-to-business fleet management model will start the
foundation for global growth in this adjacency
- PVM's experienced leadership team will continue leading the
business with a focus on growth
Expansion
- The transaction underlines Lithia's plans to invest further in
the evolving UK automotive industry, delivering omni-channel and
eCommerce optionality for customers to shop wherever, whenever, and
however they desire
- Pendragon's UK motor and vehicle management divisions are
highly complementary to Lithia's existing UK brand and geographic
footprint following the investment in Jardine Motors Group ("JMG")
in March 2023 with the combined
platform representing 3.6% new vehicle market share
- Post-completion the combined business will report to
Neil Williamson, Lithia's UK
President who has led the rapid and seamless integration of JMG
since the investment in March 2023
and the addition of two BMW stores in Maidstone and Tunbridge Wells
in August 2023
Bryan DeBoer, Lithia &
Driveway President and CEO, said:
"The strategic partnership
with Pinewood Technologies and acquisition of Pendragon's UK motor
and vehicle management divisions is a massive step in delivering on
our longer-term growth strategy. We are excited about the great
potential in Pinewood's offering and envision our strategic
partnership to further expand this SaaS business globally.
Additionally, the proposed acquisition presents a highly
synergistic growth opportunity with our existing UK presence with
Jardine Motors Group; provides a new adjacency with PVM; and
expands our brand and geographic footprint while serving to further
strengthen our existing OEM relationships. This transformative
transaction provides key strategic components for LAD to achieve
its previously stated goal of $2.00
of EPS for every $1 Billion in
revenue in the future."
Bill Berman, Chief Executive
of Pendragon PLC added:
"Pendragon has built one of the UK's
leading automotive retailing businesses, underpinned by a market
leading dealer management system, the quality of our people,
long-standing relationships with OEMs and excellent execution for
customers. The Pendragon Board considers Lithia to be perfectly
placed to build on this progress. The launch of Pinewood as a
standalone company is a unique and exciting opportunity to create a
best-in-class product for customers, which we can market globally
and drive substantial value for our shareholders and in Lithia we
have the perfect partner to help accelerate Pinewood's push into
the hugely attractive North American DMS market."
The cash consideration for the strategic partnership with
Pinewood Technologies and acquisition of the UK motor and fleet
management divisions of Pendragon is approximately $350 million USD (£280 million GBP).
Post-completion, Lithia would have estimated annualized revenues of
over $38 billion USD. The acquisition
is planned to be financed using existing on-balance sheet capacity.
Goldman Sachs & Co. LLC is serving as exclusive financial
advisor and Latham & Watkins LLP is serving as legal advisor to
Lithia for the transaction.
About Lithia & Driveway (LAD)
Lithia &
Driveway (NYSE: LAD) is one of the largest global automotive
retailers providing a wide array of products and services
throughout the vehicle ownership lifecycle. Convenient and
hassle-free experiences are offered through our comprehensive
network of physical locations, ecommerce platforms, captive finance
solutions and other synergistic adjacencies. We deliver consistent,
low-risk, and profitable growth in a massive and unsolicited
industry. Our highly diversified and competitively differentiated
design provides us the flexibility and scale to pursue our vision
to modernize personal transportation solutions wherever, whenever,
and however consumers desire.
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SOURCE Lithia Motors, Inc.