Lithia Motors to Acquire Pendragon Dealerships and Fleet Business
In a strategic move that showcases its merger and acquisition expertise and future business strategies, Lithia Motors Inc. has announced its agreement to acquire the dealerships and fleet business of Pendragon, one of the largest auto retailers in the United Kingdom. Additionally, Lithia will form a joint venture with Pendragon for the dealership management system Pinewood.
Acquisition Details
Lithia plans to acquire Pendragon’s 160 retail locations across the U.K., which primarily consist of new-vehicle dealerships branded as Stratstone or Evans Halshaw. The acquisition also includes Pendragon Vehicle Management, a vehicle fleet management platform comprising approximately 15,000 to 20,000 vehicles in the U.K.
However, the most significant aspect of the deal is the creation of Pinewood Technologies, which will become its own software company. Under Pendragon’s ownership, Pinewood has amassed around 30,000 users across Europe, Africa, and Asia.
Joint Venture and Future Plans
Once the transaction closes, Lithia will hold a 16.7 percent stake in Pinewood Technologies. Lithia intends to convert its existing U.K. dealerships, which it acquired in March through the purchase of Jardine Motors Group, to the Pinewood system. Furthermore, Lithia plans to establish a joint venture with Pinewood to introduce a dealership management system to the U.S. and Canada in the future.
According to Lithia CEO Bryan DeBoer, the collaboration with Pinewood will allow Lithia to leverage its assets and develop a North American software solution over the next three to five years, expanding the profit margins of Pinewood significantly.
Financial Impact
Lithia estimates that the Pendragon acquisitions will contribute $4.5 billion in annual revenue, making it the largest revenue increase resulting from any of its previous blockbuster purchases. Following the completion of the deal, Lithia’s annualized revenues are projected to exceed $38 billion, bringing the company closer to its goal of achieving $50 billion in annualized revenue by the end of 2025.
The partnership and acquisition of Pendragon’s dealership and fleet business will cost Lithia $350 million. The company plans to finance the transaction using its existing on-balance sheet capacity.
Leadership and Expansion
Pendragon CEO Bill Berman, former AutoNation COO, will assume the role of CEO at Pinewood. Berman expressed excitement about Pinewood’s launch as a standalone company and its potential to create a best-in-class product for customers globally, with Lithia serving as the perfect partner to accelerate Pinewood’s entry into the North American dealership management system market.
Lithia’s acquisition of Pendragon fulfills a long-awaited goal. In August 2022, there were reports of Lithia’s failed attempt to purchase Pendragon. Lithia CEO Bryan DeBoer confirmed discussions at that time but stated that his company ultimately withdrew. With the addition of Pendragon, Lithia now has a comprehensive presence in the U.K., complementing its existing footprint acquired through the Jardine Motors Group deal.
Based in Medford, Oregon, Lithia Motors is the top-ranked dealership group in the U.S., according to Automotive News’ list of the top 150 dealership groups. In 2022, Lithia retailed 271,596 new vehicles, including sales from its international dealerships.
