AutoNation is now looking to purchase the U.K.-based Pendragon automotive group, offering the company $544 million on Tuesday.
The move has kicked off a bidding war between the top U.S. dealership groups as the U.K.’s second-largest automotive retailer expands its presence in North America. AutoNation’s unprompted proposal comes days after Penske Automotive Group and Pendragon’s largest shareholder Hedin Mobility Group upped their joint buyout offer to 32p per share. The company refused their original $486 million bid last week. The moves have caused the British retailer’s stock price to rapidly appreciate in recent weeks.
The move also comes just over a week after Lithia Motors, AutoNation’s chief rival in the U.S., won its bid to purchase the U.K. brand’s leasing operations for $304 million. Pendragon will also collaborate with the automotive group to bring its retailing software to more North American dealerships.
The new bidding war emphasizes the rapid return of large-scale automotive mergers and acquisitions in the U.S. as confidence in the economy slowly bounces back from the COVID pandemic. AutoNation has been involved in several notable dealership group buyouts since the start of the year and recently purchased five storefronts in the highly competitive California market. In February, Lithia Motors surpassed its primary competitor to become North America’s largest auto retailing network, although it is unclear where the two companies now stand. However, while U.S. companies frequently consolidate with each other, it is rare to see M&A activity of this size on an international scale. Pendragon has said its board will consider AutoNation’s offer in the coming days.
