A second offer in three days has been made for Pendragon. The offer has sent shares in the business up more than 12%, raising the prospect of a bidding war for the dealer group.

The new offer of 28 pence a share for the whole of Pendragon comes from Swedish firm Hedin Mobility Group and US group Penske. This offer follows a bid two days ago by Lithia which aims to buy the retail and fleet operations and leave the Pinewood software business as a PLC.

The new offer however has been “unanimously rejected” by the Pendragon board.

In a stock market statement Pendragon said: “The proposal is subject to a number of conditions, including the completion of due diligence and external debt financing.

“The board carefully considered the proposal, including taking advice from its advisers, and concluded that it fundamentally undervalues the company. It is therefore not in the best interests of shareholders or other stakeholders.

“The board is excited about the future prospects for Pendragon as a result of the transaction announced with Lithia Motors Inc on 18 September 2023. If  completed, this deal will deliver a substantial cash dividend and create a pure play software as a service business with an accelerated growth plan and a strategic partnership to enter North America.

“There can be no certainty that any firm offer will be made. Shareholders are advised to take no action at this time.”

Auto Retail Agenda understands the Lithia purchase took Hedin, Pendragon’s largest shareholder and previous bidder for Pendragon, by surprise.

Hedin first made a 28p a share offer for Pendragon in early 2022 and then increased this to 29p a share later in the year, valuing Pendragon at £411 million. At the same time, Hedin blocked a 29p a share offer from Lithia.

Shares have risen more than 12% today, 20 September, and 42% in the past week.

Pendragon shareholders are set to vote on the Lithia deal on 6 October. The offer requires a 51% majority to be approved.

Pendragon is also set to reveal its first-half results next week.