Pendragon has disposed of its two Hornburg Group Jaguar Land Rover (JLR) dealerships in California as it progresses its plans to reduce its exposure to premium brands and withdraw from the US.
The AM100’s former number one franchised retail group announced today (April 2) that it has agreed to dispose of the trade and assets of the businesses in Mission Viejo and Newport Beach, California, as part of a bid to retrieve £100 million from its operations across the Atlantic.
Today’s announcement by the group, which is now led by Mark Herbert, revealed that the total consideration for the two businesses amounts to £60 million, although this figure has yet to be finalised.
Lithia Motors will acquire the Mission Viejo facility, while US Auto Trust will acquire the Newport Beach site, subject to completion of due diligence by both purchasers.
US Auto Trust’s planned acquisition follows its purchase of Pendragon’s single Aston Martin business in the US on July 2, 2018, for consideration of £3.1m.
Former Pendragon chief executive, Trevor Finn, announced his plan to dispose of its US-based Hornburg Group business and begin the reduction of its premium franchises in the UK as part of a revised business strategy back in December 2017.
The strategy aimed to deliver the disposal of its five franchised outlets – with Jaguar Land Rover, Aston Martin and Chevrolet – is the US and a reduction in the representation of premium franchises which fall within its Stratstone business on UK soil.
In statement issued via The London Stock Exchange at the time, Finn said: “Following our strategic review, we have focussed on reshaping the business to accelerate transformation and ensure capital allocation is optimised across the group.
“The actions I am announcing today are a further step towards achieving our strategic objectives.
“I believe this strategy will provide more reliable and sustainable returns.”
Pendragon this week confirmed that the two US disposals were “in-line with the Company’s stated strategy of disposing of its US Motor Group”.
It added: “The intended application of the sales proceeds, expected to be received in Q3, will be announced as part of the strategic update which will be provided with the announcement of the Company’s interim results.
“The Company will make a further announcement upon completion of each of the Transactions or earlier in the event that the First Transaction or the Second Transaction will not proceed to completion. The Company continues to progress the disposal of the remainder of its US Motor Group.”
Pendragon’s US disposals, which remain subject to due diligence proceedings, come a fortnight after it reported an underlying pre-tax loss of £2.8m in the quarter – £10m worse than it previously expected – in the three months to March 31, 2019.
Pendragon said that the losses were “comprised of circa £7 million from the net impact of higher revenue and lower margins, circa £2 million of additional operating costs and circa £1 million from the lower than expected Car Store performance”.
The losses came despite a 4.6% like-for-like increase in overall revenues (1.2% total) in the three months to March 31, 2019, with its revenues from new and used vehicles up by 6.3% and 2.9% (up 2.6% and down 0.2%), respectively, during the period.
Aftersales revenues have risen by 5.5% like-for-like and (2% total), the group said.