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Troubled dealer group reconsiders DMS subsidiary sell-off
PENDRAGON has abandoned plans to float Pinewood, its profitable dealer management software business, as a result of uncertainty in the equity markets.
The dealer group, number one in the Motor Trader Top 200, is now reviewing its plans for the Birmingham based operation which sells the Pinnacle DMS platform.
The group is thought to have considered making the business the subject of an Initial Public Offering (IPO) on the stock exchange late last year but the worsening financial climate prompted it to revise its plans.
The IPO was thought to have been driven by the group’s attempts to off-set some of the huge losses it incurred last year after the new car market went into sharp decline.
The group warned in November it would plunge £30m into the red in 2008 while taking a further hit of £15m after closing 75 dealerships since June 2007.
Motor Trader understands that Pendragon would have retained an interest in the business after flotation.
Despite the dealer group’s financial problems, which saw shares dip to a 2008 low of 1.4p in December on a market capitalisation of just £11.5m, its Pinewood division made a pre-tax profit in 2007 of £8m, a year-on-year increase of 53 per cent, on sales of £21m.
The group is reportedly still considering its options for the software business, thought to be worth up to £60m, although finding a buyer is looking tougher following the downturn of the economy.
Also, further consolidation of the DMS sector saw the US Kalamazoo-Reynolds giant acquire the Swindon-based MMI Automotive, which runs the Automate DMS, for an undisclosed sum in November.