MARKET REPORT: Pendragon slumps after Swedes pull takeover bid

Pendragon suffered a blow yesterday after its largest shareholder walked away from a proposed takeover. 

The car dealer said that Hedin Mobility, the family-owned Swedish motor retailer which holds a 27.59 per cent stake, decided against tabling an offer for the shares it does not own due to ‘challenging market conditions and the uncertain economic outlook’. 

Shares, which have fallen nearly 13 per cent this year, plunged another 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’. 

Hedin Mobility approached Pendragon on September 21 with a cash offer of 29p a share, which valued the business at £400m. At the time, Hedin said it ‘believes in the long-term potential of Pendragon’ but insisted the approach may not result in a firm offer. 

AJ Bell investment director Russ Mould said: ‘Car retailers 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 seems to have burst as people watch their pennies and find ways to keep their existing motor running for longer rather than seeking an upgrade or change over.’ 

The FTSE 100 edged up 0.06 per cent, or 4.46 points, to 7476.63 and the FTSE 250 rose 0.5 per cent, or 91.99 points, to 18916. Oil prices inched up 0.1 per cent to $76 a barrel but remained 10 per cent below the start of this week amid fears over the health of the global economy.

Commerzbank analyst Carsten Fritsch said: ‘The EU’s oil embargo against Russia, and the G7 price cap on Russian oil that came into force at the start of this week, have been just as powerless to prevent this as the easing of coronavirus restrictions in China and robust Chinese crude oil imports have.’ 

As a result BP fell 0.4 per cent, or 2p, to 461.95p and Shell was down 1 per cent, or 23.5p, to 2286p. 

Guinness owner Diageo sank 0.9 per cent, or 33p, to 3743p after Jefferies cut the 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 swung into reverse after Deutsche Bank lowered the target price to 4400p from 4500p. Shares inched down 0.8 per cent, or 35.5p, to 4125.5p. 

There was better news for Intercontinental Hotels Group. 

The owner of Holiday Inn and Crowne Plaza is ‘underappreciated in the UK market’, according to Peel Hunt, which upgraded its rating to ‘buy’ from ‘hold’ and raised the target price to 5750p from 4600p. At a result, shares gained 4.1 per cent, or 194p, to 4986p. The mining giant Anglo American was also one of the blue-chip index’s largest fallers, down 3.3 per cent, or 109.5p, to 3190p, after it warned that it was likely to write down the value of the Woodsmith fertiliser mine near Whitby in North Yorkshire after project delays and cost overruns. 

Among the mid-cap stocks, investors in Man Group cheered following the launch of a share buyback programme worth up to £101.61m ($125m). Shares in the UK investment manager added 5.3 per cent, or 10.9p, to 215.2p. 

Meanwhile, Porvair, which makes filters to be used in anything from aeroplanes to food factories, soared 11.5 per cent, or 61p, to 590p after saying that its revenue growth for the year to November is expected be around 18 per cent higher than 2021. 

Industrial equipment supplier Crestchic agreed to be snapped up by the portable power firm Aggreko for 401p a share or £122m. Shares surged yesterday by 11.8 per cent, or 42p, to 398p.