LONDON (Reuters) – British car dealership Pendragon (PDG.L) is to sell its U.S Motor Group business after concluding a strategic review following a profit warning, it said on Monday.
The firm, which warned on profit in October due to a fall in demand for new cars, said early indications from its adviser were that the group could anticipate proceeds in excess of 100 million pounds ($134.3 million) before tax for the business.
“Given the strong performance of this division, we have concluded it is economically right to sell the business at this time to realize its value,” it said.
Pendragon also said it had completed a review of capital allocation for premium brands within its UK new car business and concluded that franchise locations will be reduced over a three year period. It said this would release 100 million pounds of capital through disposal proceeds and investment savings.
The group said its used car business would remain its focus for growth. It is targeting doubling its used car revenue by 2021.
Pendragon also plans to resume its share buyback program.
“Following our strategic review, we have focused on reshaping the business to accelerate transformation and ensure capital allocation is optimized across the group,” said Chief Executive Trevor Finn.
Shares in Pendragon, down 32 percent over the last six months, closed Friday at 25.3 pence, valuing the business at 360 million pounds.
($1 = 0.7447 pounds)
Reporting by James Davey; editing by Kate Holton