Lithia eyes next possible acquisition: U.K.’s Jardine Motors

Lithia Motors Inc. appears a step closer to entering the United Kingdom, which would be the auto retailer’s second international market and a continuation of its geographic diversification, according to a recent report.

Sky News on Jan. 23, citing sources, said Lithia is “within weeks of finalizing a deal to buy” Jardine Motors Group for around $371.4 million. Sky News reported that the deal remains under discussion.

Lithia CEO Bryan DeBoer told Automotive News in Dallas last week that the company doesn’t comment on acquisitions until a deal is complete.

However, DeBoer said Lithia has been looking for the right partner in the U.K. and in Western Europe for nearly half a decade.

“We hope to be there in the next few quarters or so,” he told Automotive News.

Jardine Motors, part of conglomerate Jardine Matheson Holdings, is Europe’s 23rd-largest dealership group by annual revenue, according to the Automotive News Europe 2022 Guide to Europe’s Biggest Dealers. It has 45 new-vehicle franchise points in the U.K. Jardine Motors’ portfolio of 14 vehicle brands ranges from Mini and BMW to Ferrari, according to its website.

DeBoer has hinted at Lithia entering other international markets beyond Canada, including the U.K. Lithia entered Canada in August 2021.

In August, Sky News named Lithia as the unidentified bidder in a failed deal to buy Pendragon, one of the largest auto retailers in the U.K.

At the time, Pendragon was Europe’s ninth- largest dealership group by revenue, according to the Automotive News Europe 2021 Guide to Europe’s Biggest Dealers, with 142 new-vehicle franchise points in the U.K. Pendragon also has its own dealership management system.

Steve Young, managing director of European research and consultancy business ICDP in the U.K., said it seems highly likely Lithia will end up in the country.

Young, in an email to Automotive News, called Jardine Motors a significant group in the U.K. He said acquiring Jardine Motors would not give Lithia the same scale as buying Pendragon, but that the group is big enough to carry costs and investments required for digital retail, centralized support for after-sales and used-vehicle operations.

“Other than the heavy skew of the brand portfolio to premium, there is nothing that I would identify as being unique or special about Jardine but it is still a solid foundation on which to build,” Young wrote. “You could argue that by buying a business in this condition you’re not paying a premium for recent investments and possibly success of the previous owners’ efforts. In addition there is nothing that’s wrong about the business so there’s no remedial work required.”

Stephens Inc. analyst Daniel Imbro said in a note to investors last week that Lithia’s pursuit of a U.K. asset “is not surprising, following headlines of the company’s interest in Pendragon last year.” Imbro wrote that he thought reaction to the acquisition could be potentially negative, “but we believe there are strategic merits to exposure in that market.”

Lithia, of Medford, Ore., ranks No. 2 on the most recent Automotive News list of the top 150 dealership groups based in the U.S., retailing 260,738 new vehicles in 2021. Through the third quarter of last year, Lithia is tracking ahead of rival AutoNation Inc. for new-vehicle sales in 2022. AutoNation has long held the No. 1 spot in the annual ranking.

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