MARKET REPORT: Pendragon slumps after Swedes pull takeover bid

Pendragon took a beating yesterday after its largest shareholder walked away from a proposed takeover.

The car dealer said Hedin Mobility, the family-owned Swedish car retailer with a 27.59 percent stake, has decided not to bid for the shares it does not own due to “challenging market conditions and the uncertain economic outlook.”

Shares, which are down nearly 13 percent this year, plunged another 28.4 percent or 8 pence to 20.2 pence following the news. The company behind brands like Evans Halshaw and Stratstone tried to put a spin on the failed deal, claiming the process had “highlighted the value of Pendragon.”

Hedin Mobility approached Pendragon on 21 September with a cash offer of 29 pence per share, valuing the company at £400 million. At the time, Hedin said it “believes in Pendragon’s long-term potential,” but insisted the approach may not result in a final offer.

AJ Bell investment director Russ Mold said: “Car retailers have been in high demand during the pandemic as a shortage of new vehicles and a sudden surge in used car demand sent the market red hot. That bubble now seems to have burst as people watch their pennies and find ways to keep their existing engine running longer rather than looking for an upgrade or a switch.”

The FTSE 100 rose 0.06 percent, or 4.46 points, to 7476.63 and the FTSE 250 rose 0.5 percent, or 91.99 points, to 18916. Oil prices rose 0.1 percent to $ 76 a barrel, but remained 10 percent below this week’s starting point 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 effect early this week were just as powerless to prevent this as the easing of coronavirus restrictions in China and have robust Chinese crude oil imports.”

As a result, BP fell 0.4 percent, or 2p, to 461.95p and Shell fell 1 percent, or 23.5p, to 2286p.

Guinness owner Diageo fell 0.9 percent, or 33 pence, to 3743p after Jefferies lowered its price target from 4500p to 4300p.

Meanwhile, Unilever, the consumer goods giant behind brands like PG Tips, Marmite and Ben & Jerry’s, also reversed after Deutsche Bank cut its target price from 4500p to 4400p. Shares fell 0.8 percent, or 35.5 pence, to 4125.5 pence.

There was better news for Intercontinental Hotels Group.

The owner of Holiday Inn and Crowne Plaza is “undervalued in the UK market,” said Peel Hunt, who upgraded his rating from “hold” to “buy” and raised the price target from 4,600 pence to 5,750 pence. As a result, shares gained 4.1 percent, or 194 pence, to 4986 pence. Mining giant Anglo American was also one of the biggest fallers in the blue-chip index, falling 3.3 per cent, or 109.5p, to 3190p after it warned it was likely to lose the value of its Woodsmith fertilizer mine near Whitby in North America would write down. Yorkshire after project delays and cost overruns.

Among mid-cap stocks, investors in Man Group cheered after launching a share buyback program worth up to £101.61 million ($125 million). Shares in the British asset manager added 5.3 percent, or 10.9 pence, to 215.2 pence.

Meanwhile, Porvair, which makes filters for use in everything from airplanes to food factories, rose 11.5 percent, or 61 pence, to 590 pence after saying sales growth for the year to November is expected to be about 18 percent higher than in 2021.

Industrial equipment supplier Crestchic agreed to be snapped up by portable power company Aggreko for 401p per share or £122 million. Shares rose 11.8 percent, or 42 pence, to 398 pence yesterday.