Pendragon is to sell all of its car dealerships for £280m in order move towards a focus on software, the firm has announced today.

The showrooms will be sold by the UK automotive retailer to US group, Lithia, which already owns 50 sites in the UK, with Pendragon being taken off London’s stock market.

Lithia Motors and Pendragon have also agreed to form a strategic partnership with Lithia, of which the US firm will own 51%.

Pinewood, the company’s dealer management software business, is also expected to be sold across the US, in a market that the partnership values at £2.6bn.

As part of the transaction, Pendragon shareholders will initially receive approximately 27.4p per share, with further significant upside expected from the strategic partnership.

Lithia attempted to buy Pendragon outright in 2022 for £460m, but this required 75% shareholder approval and was blocked by Pendragon’s leading shareholder, Hedin, which owns a third of the automotive retailer.

The Swedish firm then tried to buy Pendragon last autumn but this was rebuffed.

The new deal with Lithia requires a straight majority from shareholders at Pendragon to approve it, making it harder for Hedin to overturn it.

Non-executive chairman at Pendragon, Ian Filby, said: “Pendragon has made strong progress executing its strategy in recent years and the business has been repositioned successfully as a digitally-enabled automotive retailer. Today's announcement follows an extensive strategic review undertaken by the board of Pendragon to maximise value for our stakeholders. The proposed transaction provides shareholders with an immediate dividend close to the company's undisturbed market capitalisation as well as ongoing ownership in an exciting technology company with improved growth prospects.”

Chief executive at Lithia, Bryan DeBoer, added: “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.”

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