- Total cash consideration payable increased by
42%
- Expected dividend to Pendragon shareholders of
24.5 pence, a 49%
increase
- Implied total initial value to Pendragon shareholders of
35.4 pence per Pendragon
share
- Preliminary commitments to Lithia from multiple major UK
automotive retailers to adopt the Pinewood DMS
- Significant further upside from the strategic partnership
including North American JV
- Strategic benefits for Lithia with delivery on
longer-term growth objectives
- Planned investment will be financed using existing
on-balance sheet capacity
MEDFORD,
Ore., Oct. 2, 2023 /PRNewswire/ -- Lithia &
Driveway (NYSE: LAD, "Lithia") announced today that it has signed a
revised agreement on improved terms with the Board of Directors of
Pendragon plc ("Pendragon") to enter into a strategic partnership
with Pinewood Technologies ("Pinewood Tech") and to acquire
Pendragon's UK motor division and vehicle management division.
Under the revised terms, Lithia has increased the total
cash consideration versus its original offer announced on
18 September 2023 by 42%, to £397
million and has increased the overall certainty of the transaction
by removing certain completion conditions. The combined value of
the consideration to Pendragon existing shareholders is initially
equivalent to approximately 35.4
pence per share with significant upside expected from the
strategic partnership and North American joint venture
opportunity.
The additional cash consideration is expected to increase the
cash dividend payable to Pendragon's existing shareholders 49%
to 24.5 pence per share. Existing
Pendragon shareholders will continue to retain approximately 83.3%
ownership in Pinewood Tech and a share in a valuable joint venture
to expand Pinewood's software into the North American market.
Additionally, Lithia has obtained preliminary commitments
from multiple major automotive retailers to contract and roll out
the Pinewood dealer management systems ("DMS") to their locations,
representing approximately 7,500 users, contingent on the
successful completion of the Lithia transaction. These preliminary
commitments would only occur with Pinewood Technologies
transforming, into a London Stock Exchange listed, pure-play,
independent software business. The potential addition of these UK
users, with Lithia's already committed 2,500 users in the UK,
represents over 30% growth from Pinewood's current user base of
approximately 31,700 as of December
2022 and nearly half of Pinewood's FY27 target.
The improved terms and preliminary commitments from Lithia
demonstrate support for the transformation of Pinewood Technologies
into a standalone business and unlocking significant future
potential.
Bryan DeBoer, Lithia & Driveway President & CEO,
said:
"Our transaction provides considerable value and
certainty for Pendragon shareholders while unlocking Pinewood's
ability and massive potential as a standalone, pure-play SaaS
business. We have a pathway to reach completion quickly, proven
experience in successfully integrating businesses and great growth
opportunities for the Pendragon employees. We are very excited
about the strength of our strategic partnership and expanding the
Pinewood business not just in the UK but around the world."
The acquisition is planned to be financed using Lithia's
existing on-balance sheet capacity once approved by Pendragon
shareholders. The revised terms of the transaction continue to
represent an opportunity for Lithia to further expand and diversify
its business and deliver a key strategic component to achieve its
previously stated growth plans.
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.