Penske Automotive to Go Private in US$16.3 Billion Deal Led by Penske Corp and Mitsui

Penske Automotive Group, one of the largest car dealership operators in the United States, has agreed to be taken private by its two biggest shareholders, Penske Corporation and Japan’s Mitsui & Co., in a cash deal that values the company at about US$16.3 billion including debt, Benzinga reported on Thursday. Minority investors will receive US$212 for each share they hold.

The offer is about 8.8% above the stock’s closing price on Wednesday. Investing.com noted it also represents a 26.2% premium to the volume-weighted average price over the 90 days before the buyers first approached the board with their proposal in July. Shares of the New York-listed company jumped more than 8% in premarket trading after the announcement, with Benzinga putting the stock at US$211.68, just below the offer price. Trucking publication Transport Topics said the shares had already climbed 23% this year before the news.

Ownership and financing

Penske Corp, the closely held transportation group founded by Roger Penske, and Mitsui together already control roughly 72% of the dealer group’s common stock, according to Transport Topics. The purchase will be made through Motown Acquisition Corp., a vehicle jointly owned by the pair. Once the deal closes, Penske Corp will hold about 64% of the company and Mitsui the remaining 36%, cementing a partnership that has lasted around 25 years.

The buyer group has lined up up to US$2.2 billion in equity commitments and US$1.8 billion of committed debt financing from J.P. Morgan, Bank of America and Wells Fargo, Investing.com reported, along with an amendment that would enlarge the company’s revolving credit facility by as much as US$900 million. The buyers said the transaction is “not subject to a financing condition.”

The agreement includes a US$383 million break fee payable by Penske Automotive in certain circumstances, while the buyers would owe a US$488 million reverse termination fee if they fail to complete the deal.

Board backing and approvals

A special committee of independent directors, chaired by David Hoogendoorn and advised by Moelis & Company, unanimously recommended the offer, and the full board approved it. According to Benzinga, Hoogendoorn argued the buyout delivers more value to minority shareholders than remaining a listed company, while chairman and chief executive Roger Penske said it would deepen the group’s ties with Mitsui.

The deal needs the support of a majority of outstanding voting shares as well as a majority of votes cast by unaffiliated shareholders, along with regulatory clearances. Completion is targeted for the first quarter of 2027, after which the stock will be delisted from the New York Stock Exchange.

Business backdrop and what’s next

Penske Automotive runs dealerships in seven countries, is among North America’s biggest commercial truck retailers and employs more than 28,900 people worldwide. The move comes as US car dealers contend with rising vehicle prices and high borrowing costs, though Transport Topics noted they may gain from stronger parts and service demand as motorists hold on to their vehicles for longer.

Shareholders will keep receiving quarterly dividends until the deal closes. The board lifted the payout by two cents to US$1.46 a share, payable on December 1 to holders on record as of November 13. Third-quarter results will still be published before the market opens on October 28, but the company has cancelled its earnings call because of the pending transaction.

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