MARKET REPORT: Pendragon falls after Swedes make takeover bid – car dealers say Hedin decided not to bid for shares it doesn’t own
Pendragon suffered a blow yesterday after its biggest shareholder walked away from a proposed takeover.
The car dealer said Hedin Mobility, the family-owned Swedish car dealer that holds a 27.59 percent stake, decided not to bid for the shares it does not own due to “challenging market conditions and the uncertain economic outlook”.
Shares, which have fallen almost 13 per cent this year, tumbled a further 28.4 per cent, or 8p, to 20.2p following the news. The company behind brands such as Evans Halshaw and Stratstone tried to put a good spin on the failed deal, claiming the process had “highlighted the value of Pendragon”.
Challenging conditions: Pendragon suffered a blow after its largest shareholder walked away from a proposed takeover
Hedin Mobility approached Pendragon on September 21 with a cash offer of 29p per share, valuing the business at £400m. At the time, Hedin said they “believe in the long-term potential of Pendragon”, but insisted the approach may not result in a firm offer.
AJ Bell investment director Russ Mold said: “Car dealers were in strong demand during the pandemic as a shortage of new vehicles and a sudden jump in demand for used cars made the market red-hot.” That bubble now appears to have burst as people watch their pennies and find ways to keep their existing engine running longer rather than seeking an upgrade or replacement.’
The FTSE 100 was up 0.06 percent, or 4.46 points, at 7,476.63 and the FTSE 250 was up 0.5 percent, or 91.99 points, at 18,916. Oil was up 0.1 percent at $76 a barrel but remained below 10 percent this week amid fears over the health of the global economy.
Commerzbank analyst Carsten Fritsch said: “The EU oil embargo against Russia, and the G7 price cap on Russian oil that came into force earlier this week, have been as powerless to prevent this as the easing of coronavirus restrictions in China and robust Chinese crude imports have.
As a result, BP fell 0.4 per cent, or 2p, to 461.95p and Shell fell 1 per cent, or 23.5p, to 2286p.
Guinness owner Diageo fell 0.9 per cent, or 33p, to 3743p after Jefferies cut its target price to 4300p from 4500p.
Meanwhile, Unilever, the consumer goods giant behind brands such as PG Tips, Marmite and Ben & Jerry’s, also retreated after Deutsche Bank cut its target price to 4400p from 4500p. Shares fell 0.8 per cent, or 35.5p, to 4125.5p.
There was better news for the Intercontinental Hotels Group.
The Holiday Inn and Crowne Plaza owner is “undervalued in the UK market”, according to Peel Hunt, which upgraded its rating to “buy” from “hold” and raised its target price to 5750p from 4600p. As a result, shares rose 4.1 per cent, or 194p, to 4986p. Mining giant Anglo American was also one of the blue-chip index’s biggest fallers, down 3.3 per cent, or 109.5p, to 3190p, after it warned it was likely to write down the value of the Woodsmith fertilizer mine near Whitby in the North Yorkshire after project delays and cost overruns.
Among mid-cap stocks, investors cheered in Man Group after it launched a share buyback program worth up to 101.61 million pounds ($125 million). Shares in the UK investment manager rose 5.3 per cent, or 10.9p, to 215.2p.
Meanwhile, Porvair, which makes filters for use in everything from aircraft to food factories, rose 11.5 per cent, or 61p, to 590p after saying its revenue growth for the year to November is expected to be around 18 per cent higher than in 2021.
Industrial equipment supplier Crestchic has agreed to be acquired by portable power company Aggreko for 401p per share or £122m. The stock rose yesterday by 11.8 per cent, or 42p, to 398p.