Pinnacle for sale

(By Richard Holway) I noted that the Sunday Times today carries an article entitled Pendragon in software sale. We all know that car sales is a particularly horrible place to be right now. So Pendragon has decided to put its software arm Pinnacle up for sale. Pinnacle had revenues of £21m and PBT of £8.1m in its latest financial year - so the expected price of £60m or 3xrevenues would look a bit rich even in normal times. These are no normal times. If Pendragon are having problems, you can bet your life that the market for "automated back office management systems for vehicle sales and marketing" (Pinnacle's market sector) is a bit tough at the moment too.

The scale of the problem facing the car dealership market is brought into focus by the second part of the Sunday Times article. "Two years after forking out £500m for Reg Vardy, Pendragon, whose shares closed on Friday at 5¼p, down from a 12-month high of 61p, now has a market value of £34.5m. The company has already closed 71 dealerships from a total of about 300 nationwide, in addition to cutting its work-force by 500. More layoffs are likely as trading worsens. "

In other words Pendragon is worth about half what it expects to get for its Pinnacle subsidary...