Penske Automotive agrees $16.3bn take-private

Penske Automotive Group has entered into a definitive merger agreement under which it will be taken private by Motown Acquisition Corp., an entity owned by Penske Corporation and Mitsui & Co. The transaction provides for an all-cash purchase of Penske Automotive common stock held by shareholders other than Penske Corporation, Mitsui and the other members of the investor group.

Under the terms of the agreement, these public holders will receive $212.00 per share in cash. The price values Penske Automotive at an enterprise value of approximately $16.3 billion, establishing one of the larger recent take-private transactions in the U.S. automotive retail sector.

Upon completion of the merger, Penske Automotive will become a privately held company. Ownership is expected to be approximately 64% held by Penske Corporation and 36% held by Mitsui. This structure concentrates control in the two long-standing partners through the Motown Acquisition Corp. vehicle.

The company’s common stock will cease to be publicly traded once the transaction closes. Existing public investors will no longer participate in future equity upside or downside, instead realizing the agreed cash consideration at closing.

A special committee of independent and disinterested directors of Penske Automotive’s board reviewed the proposed deal. The committee unanimously recommended that the full board approve the transaction with Motown Acquisition Corp.

Following that recommendation, the full Board of Directors approved the merger agreement. The process is designed to address potential conflicts inherent in a transaction involving a buyer group that includes a major existing shareholder.

The transaction is expected to close in the first quarter of 2027. Completion is subject to several customary closing conditions, including receipt of required regulatory approvals.

The deal also requires the affirmative vote of holders of a majority of the outstanding shares of Penske Automotive common stock that are entitled to vote. In addition, it must be approved by a majority of the votes cast by unaffiliated stockholders, as defined in the merger agreement.

Penske Automotive intends to file a preliminary proxy statement on Schedule 14A with the U.S. Securities and Exchange Commission. This filing will relate to a special meeting of shareholders convened to vote on approval of the proposed merger.

Separately, the company, Motown Acquisition Corp. and certain of their affiliates also plan to jointly file a transaction statement on Schedule 13E-3. That filing will provide additional disclosures associated with this going-private transaction.

Penske Automotive expects to continue paying regular quarterly cash dividends until the transaction closes, subject to specified limits outlined in the merger agreement. This approach maintains the company’s dividend practice for existing shareholders during the interim period.

For any partial quarter that ends before the closing date, the company expects to pay a prorated dividend. These payments will be in addition to the $212.00 per share cash consideration that eligible shareholders receive when the merger is completed.