Ridgeview has approached the automotive retail software provider Pinewood.AI with a non-binding cash proposal worth £4.48 per share.
The possible offer would value Pinewood.AI’s entire issued and to be issued share capital at approximately £545m.
It represents a 43% premium to the company’s closing share price of £3.14 on July 23, the last business day before the announcement.
The price is also 53% above Pinewood.AI’s one-month volume-weighted average share price and 64% above its three-month average.
Pinewood.AI’s board said it would be minded to recommend the offer to shareholders if Ridgeview announces a firm intention to proceed on the same terms.
Ridgeview must either make a firm offer or announce that it does not intend to proceed by 5pm on August 21, unless the Takeover Panel agrees to extend the deadline.
Pinewood.AI shareholders indicate support
The possible transaction has already received letters of intent from shareholders representing approximately 48.7% of Pinewood.AI’s issued share capital.
These include Lithia UK Holding, which owns approximately 31.95% of the business, alongside Working Capital Partners, Feoh Investments, Newtyn Partners and Hosking Partners.
Shareholders representing around 32.8% of Pinewood.AI’s issued shares have also indicated that they intend to select a proposed rollover alternative rather than receive the full consideration in cash.
Under that alternative, eligible investors could exchange some or all of their Pinewood.AI shares for an unlisted interest in a Ridgeview-managed holding company.
The total value available through the rollover structure would be capped at approximately £250m.
The acquisition would be carried out through UK Piston Bidco, a newly formed company indirectly owned by entities administered by Ridgeview.
The proposed transaction is expected to be implemented through a court-approved scheme of arrangement, although Ridgeview has reserved the right to use a contractual takeover offer.
Board highlights need for investment
Pinewood.AI said the proposal would give shareholders an opportunity to secure immediate cash value at a level that might otherwise take the company several years to achieve.
The board said delivering Pinewood.AI’s longer-term strategy would require continued investment, innovation and execution at scale, with the outcome subject to a range of uncertainties.
Ian Filby, chairman of Pinewood.AI, said: “Since becoming an independent software business in 2024, Pinewood.AI has delivered significant strategic and operational progress, strengthening its position as a leading global automotive technology platform.
“While the board remains confident in the company’s long-term prospects, we recognise that the next phase of Pinewood.AI’s growth will require continued investment, innovation and execution at scale.
“Against that backdrop, the board believes it is right to engage constructively with Ridgeview Partners, who bring deep technology expertise, long-term capital and a shared ambition for the business.”
The approach follows a previous possible acquisition by Apax Partners earlier this year.
Pinewood.AI said in January that it was minded to recommend a potential £575.5m offer from Apax, but the private equity firm withdrew the following month, citing challenging market conditions.
Ridgeview targets international growth
Pinewood.AI provides cloud-based dealership management technology used by retailers and manufacturers to manage vehicle sales, customer relationships, workshops, accounting and other business functions.
Ridgeview described Pinewood.AI as a mission-critical technology provider with high recurring revenues, established manufacturer partnerships and strong market positioning.
The private equity firm said it intends to retain Pinewood.AI’s existing management and employees while providing capital and operational expertise to support further expansion.
Its priorities would include accelerating Pinewood.AI’s growth in North America and pursuing selective acquisitions where financially and strategically attractive.
Ridgeview said Pinewood.AI would be better able to pursue its strategy as a private company, with greater operational flexibility and less exposure to the demands of public markets.
Pinewood.AI is targeting underlying EBITDA of £35m in its 2027 financial year, rising to £62m in 2028.
Its longer-term aspirations include underlying EBITDA of £109m in 2029 and £162m in 2030, although the company stressed that the latter two figures are aspirational targets rather than formal profit forecasts.
The proposed cash consideration would be funded through a combination of debt and equity financing.
Pinewood.AI cautioned that discussions remain subject to several pre-conditions and there can be no certainty that a firm offer will be made.