Penske Automotive Leaves the NYSE: Penske Corp and Mitsui Take the Dealer Group Private for $16.3 Billion

Penske Automotive Leaves the NYSE: Penske Corp and Mitsui Take the Dealer Group Private for $16.3 Billion

Two biggest shareholders buy out the float

Penske Automotive Group said on Thursday, Oct. 15, that it has signed a definitive merger agreement to be taken private by Motown Acquisition Corp. in a transaction carrying an enterprise value of about $16.3 billion, including debt. The Bloomfield Hills, Michigan-based automotive and commercial truck retailer will give up its New York Stock Exchange listing. The buyer is not an outside suitor: it is an entity owned by the company's two largest existing shareholders.

$212 a share, an 8.84% premium to Wednesday

Under the deal, holders of Penske Automotive common stock other than Penske Corporation, Mitsui and other members of their investor group will receive $212.00 per share in cash. That represents an 8.84% premium to Wednesday's close of $194.79, an 8.6% premium to the July 21 close of $195.19, and premiums of roughly 20.09% and 26.17% to the 60-day and 90-day volume-weighted average prices measured before July 21.

The approach dates back to late July

The agreement closes a process that began on July 22, when Penske Corporation and Mitsui submitted an unsolicited, preliminary and non-binding proposal to acquire all free-float shares they did not already own — about 27.8% of the company, or 18,245,929 shares — at $210 a share. That offer implied an equity value of roughly $13.8 billion and an estimated cash cost of about $3.8 billion to $3.9 billion. The final price was negotiated up to $212.

Penske Corporation and Japan's Mitsui are the buyers

Motown Acquisition Corp. is jointly owned by Penske Corporation and Mitsui & Co. Before the deal, Penske held about 52.0% of the company and Mitsui, together with its U.S. subsidiary, about 20.3%. Members of the investor group hold 72.6% of outstanding stock and have signed voting support agreements. After closing, Penske Corporation is expected to own roughly 64% and Mitsui the remaining 36%, lifting the Japanese trading house well above its prior stake after 25 years as a shareholder.

Up to $2.2 billion of equity and $1.8 billion of debt

The buyer has lined up up to $2.2 billion in equity commitments — $1.6 billion from Mitsui and $600 million from Penske Corporation — plus up to $1.8 billion in committed debt financing from JPMorgan, Bank of America and Wells Fargo. The merger is not subject to a financing condition. The company's U.S. credit agreement was increased to $2.4 billion from $1.5 billion, with $606.0 million borrowed as of Oct. 12.

A special committee called it the best outcome

A special committee of independent and disinterested directors unanimously recommended the deal, and the full board approved it, with affiliated directors recused. Committee chair David Hoogendoorn said the committee reviewed the proposal thoroughly and concluded the transaction delivered the greatest value to minority shareholders compared with remaining a public company. Moelis & Company advised the special committee, Paul, Weiss served as its legal counsel, and Freshfields represented the company. Roger Penske, chair and CEO, called the transaction "an important next chapter for PAG."

Two votes and regulators still stand in the way

Closing conditions include regulatory approvals — Hart-Scott-Rodino waiting period expiration or termination and certain other approvals — plus the affirmative vote of holders of a majority of outstanding shares entitled to vote and approval by a majority of votes cast by unaffiliated stockholders. The deal is expected to close in the first quarter of 2027, after which Penske Automotive will delist from the NYSE and deregister. Penske Automotive would owe a $383.0 million termination fee in certain circumstances, including a superior proposal; the buyer would owe $488.0 million if it breaches the agreement or fails to close.

Team Penske's racing operation is not in the deal

The transaction covers Penske Automotive Group's automotive retail business, not the racing empire. Team Penske's NASCAR operation is not part of the transaction, and the racing programs have long been privately held, a structure the take-private leaves intact. Roger Penske founded Penske Corporation in 1969 and has owned IndyCar, Indianapolis Motor Speedway and the Indianapolis 500 since 2019.

A dealer business selling as store profits slide

The macro backdrop is mixed. Kerrigan Advisors said dealership buy-sells this year set records, with purchase prices averaging $119 million per store, and flagged the Penske Automotive offer as another record with a group value around $13.8 billion. At the same time, average store earnings fell as much as 20% year over year in the first half as new-vehicle front-end gross profit compressed and tariffs raised parts and reconditioning costs. Penske Automotive reported fiscal 2025 revenue of about $31.8 billion, operates roughly 365 franchised dealerships plus 15 used-car stores across the United States, Puerto Rico, the UK, Germany, Italy, Japan and Australia, employs about 28,900 people worldwide and owns 28.9% of Penske Transportation Solutions.

Dividend raised, third-quarter results Oct. 28

On the same day, the board raised the quarterly cash dividend to $1.46 per share, up $0.02, or 1.4%, for an annualized $5.84, payable Dec. 1 to holders of record Nov. 13. Third-quarter results are due Oct. 28 without a conference call. The stock opened at $211.00 after Wednesday's $194.79 close and traded up about 8.5% at $211.30. The analyst consensus rating is Hold, with an average price target of $209.17.