The board of one of Britain’s biggest car dealers is poised to back a takeover by a Swedish car magnate in a £400m private deal.

City sources said members of Pendragon’s board have indicated to Anders Hedin that they will recommend shareholders approve his 29p-a-share strategy.

The board’s recommendation could be announced as early as Monday ahead of a “put up or shut up” deadline.

With bosses at the weekend putting the finishing touches on the deal, sources warned that a short extension to the deadline may be required before board members’ approval is confirmed. The takeover would then have to be backed by Pendragon’s shareholders.

Separately, City sources said the deal with the Hedin Group could still fall through. There is speculation that Constellation Automotive, the group behind Webuyanycar and Cinch, may launch a competing bid.

Constellation Automotive is led by chairman Avril Palmer-Baunack, who previously led Stobart’s board. The Hampshire-based company has been at the forefront of consolidation within the UK’s fragmented car dealership market.

It acquired listed car retailer Marshall a year ago and has taken a 20 per cent stake in Lookers, another of Britain’s listed retailers.

While a swoop for Pendragon, which operates under the Evans Halshaw, Stratstone and CarStore brands, would attract the interest of competition regulators, such a deal would leave Constellation with only about 20 percent of the UK car retail market, sources added.

Pendragon and Lookers held talks about a potential merger in May 2020. Discussions ended without agreement.

A rival bid would likely have to be in the region of 35p per share, the price at which Hedin has previously indicated it would be willing to sell its current 27.5pc stake in Pendragon.

Hedin is believed to believe that Pendragon can be run significantly more efficiently. It is aimed at savings by reducing unnecessary costs. It will likely bring in its own management team to run the business, city sources said.

Should a counter-bid not emerge, it remains to be seen whether Hedin will bring back Trevor Finn, who turned Pendragon into one of Britain’s biggest car dealers during his 30-year stint with the company.

Mr. Finn left Pendragon in 2018 amid reports of a brawl in the boardroom. His successor, Mark Herbert lasted only three months before he dropped out. Insiders claimed there had been a “difference in priorities”.

Pendragon, Hedin Group and Constellation Automotive declined to comment.