In a strategic move, Lithia plans to acquire a 16.7 percent stake in Pinewood Technologies, a transaction expected to be completed by the fourth quarter or first quarter of 2024. Upon completion, Lithia will embark on converting its existing U.K. dealerships, the majority of which were acquired in its purchase of Jardine Motors Group in March, to the Pinewood system.
Moreover, Lithia has set its sights on a joint venture with Pinewood to introduce a dealership management system (DMS) to the U.S. and Canada in the near future. Lithia’s CEO, DeBoer, revealed that the company intends to tap into the vast potential of the North American market over the next three to five years by leveraging its partnership with Pinewood.
Characterizing Pinewood as a tech-savvy and profitable cloud-based software company, DeBoer emphasized the significant opportunities for expansion and increased profit margins that the collaboration will bring.
The acquisition of Pendragon’s dealership and fleet business, amounting to an estimated $4.5 billion in annual revenue, marks Lithia’s largest acquisition to date. This deal will significantly boost Lithia’s annualized revenues, estimated to exceed $38 billion upon completion, putting the company closer to its goal of achieving $50 billion in annualized revenue by the end of 2025. The total cost of acquiring Pendragon’s business and forming a partnership is projected at $350 million, which will be financed using Lithia’s existing on-balance sheet capacity.
Pendragon CEO Bill Berman, formerly the COO of AutoNation, will continue to serve as CEO of Pinewood, ensuring continuity and stability in the transition.
In response to this development, Berman expressed excitement about the opportunity to establish Pinewood as a standalone company, enabling the creation of a superior product for customers worldwide. He also highlights the potential for significant value creation for shareholders, specifically in the highly appealing North American DMS market. Berman considers Lithia an ideal partner to accelerate Pinewood’s expansion into this market.
This acquisition of Pendragon has been a long-awaited culmination for Lithia. Previous reports in August 2022 speculated about Lithia’s involvement as an unidentified bidder in an unsuccessful attempt to purchase Pendragon. DeBoer confirmed the discussions with Pendragon at the time, noting that Lithia ultimately stepped back. However, with the addition of Pendragon, Lithia now boasts a comprehensive presence in the U.K., complementing its existing footprint through Jardine’s operations in the Midlands and London.
Ranked No. 1 on Automotive News’ list of top 150 dealership groups in the U.S., Lithia, based in Medford, Ore., retailed an impressive 271,596 new vehicles in 2022. Notably, this figure includes sales from its international dealerships.
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