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MARKET REPORT: Pendragon sees shares surge after £400m takeover bid

Takeover target: Pendragon, which owns brands such as Evans Halshaw and Stratstone, jumped 19.8% after it said it received a cash offer of 29 pence per share from Hedin Mobility Group

Car dealership Pendragon hit its highest level in five months after a takeover approach by its major shareholder.

The company, which owns brands such as Evans Halshaw and Stratstone, jumped 19.8%, or 4.5p, to 27.2p after saying it had a cash offer of 29p per Hedin Mobility share. Group last Wednesday and was considering the proposal.

The offer represents a 26% premium to the closing price on September 20, the day before Hedin approached, and values ​​the company at just over £405million.

Takeover target: Pendragon, which owns brands such as Evans Halshaw and Stratstone, jumped 19.8% after it said it received a cash offer of 29 pence per share from Hedin Mobility Group

Takeover target: Pendragon, which owns brands such as Evans Halshaw and Stratstone, jumped 19.8% after it said it received a cash offer of 29 pence per share from Hedin Mobility Group

Hedin, which operates car showrooms in countries including Belgium, Sweden and Switzerland and owns 27% of Pendragon, has been one of the board’s main critics, particularly over employee pay. leaders.

At its general meeting in June, the company suffered its third consecutive revolt over the remuneration of its bosses, with more than 65% of the votes cast against the salary package.

In August, Pendragon noted that a previous bid of 29 pence per share had been approved by all but one of its top five shareholders.

Liberum brokers said a bidding war was “unlikely” and that other shareholders were “likely to accept” the offer.

The FTSE 100 rose 0.03%, or 2.35 points, to 7020.95 while the FTSE 250 fell 1.39%, or 249.86 points, to 17,722.83.

Homebuilders slumped amid growing fears that soaring interest rates will hurt real estate demand, with soaring mortgage costs deterring potential buyers.

Taylor Wimpey fell 7.1%, or 7.31p, to 95.84p while Persimmon fell 6.6%, or 89.5p, to 1260.5p, Barratt Developments fell 5.1%, or 20.8p, to 385.2p and Berkeley fell 4.9%. or 169p, at 3315p.

Stock Watch – Magpie Music

Electronics retailer Music Magpie slumped to a record high after a profit warning.

The company, which enables consumers to buy and sell second-hand electronics, books and CDs, said performance in its consumer technology business was “weaker than expected” amid the downturn. continued pressure on profit margins.

Due to “increasing cost-of-living pressures,” it expects profits for the year to the end of November to be lower than previous expectations. It fell 67.6%, or 18.6p, to 8.9p.

As a planned stamp duty reduction announced in Chancellor Kwasi Kwarteng’s mini budget last Friday aims to boost demand for housing, many fear spiraling inflation and the prospect of a sharp rise in housing payments. interest on mortgages only exacerbate the affordability crisis.

“Many will be forced to put their dreams of home ownership on hold until the cost of living storm passes,” said Myron Jobson, analyst at Interactive Investor.

As the pound plummets, there are growing fears that the sharp drop in the pound’s value could fuel runaway inflation, forcing the Bank of England to raise interest rates further.

“The problem for the new government is that the growth it hopes to generate through tax cuts is unlikely to materialize as quickly, while the reduction in the purchasing power of the pound will actually import more inflation at a time of already acute inflationary pressures,” said Russ Mould, chief investment officer of AJ Bell.

As bank stocks generally rise on expectations of rate hikes, NatWest fell 3.6%, or 8.7p, to 233.7p while Lloyds fell 3.3%, or 1.51p, to 44.71p, Barclays slipped 0.6%, or 1.04p, to 160.82p, and HSBC fell 1.7%, or 8.4p, to 501.6p.

As Brent crude traded below $84 a barrel, Shell shares fell 0.1%, or 3p, to 2,211.5p while BP fell 0.7%, or 3.15p , at 429.95p.

Property group FTSE 250 LXi REIT has pulled out of a £500million deal to buy several supermarkets from Sainsbury’s.

The scrapping of the planned acquisition, announced last week, came as investors speculated they weren’t ready to raise enough cash given market volatility.

LXi fell 0.8%, or 1p, to 126.6p while Sainsbury’s slipped 0.8%, or 1.5p, to 191.45p.

One of the winners was defense giant BAE Systems, which rose 2.2%, or 17.4p, to 813.2p after broker Jefferies raised its target price from 960p to 1000p.

And consultancy RPS rose 15%, or 31p, to 238p after reaching a £636m takeover deal with US group Tetra Tech.

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