Pendragon skids 25% as investor drops deal pursuit on uncertain outlook

(Reuters) – Pendragon Plc’s top investor Hedin Mobility has dropped its takeover pursuit of the British auto retailer, citing challenging market conditions and an uncertain economic outlook, sending its shares down 25%.

Hedin, which owns nearly 28% of Pendragon, had proposed to buy the London-listed company for 29 pence per share, valuing it at about 406 million pounds ($497.55 million).

Pendragon’s shares fell to 20.5 pence by 0818 GMT on Friday, wiping out all their gains since the proposal was first announced in September.

The stock, which closed at 28.3 pence on Thursday, was also on track to log its biggest percentage drop since December 2008.

Britain is facing a lengthy recession, with the UK economy set to shrink in the fourth quarter, as consumer demand has been squeezed by the highest inflation in 41 years and businesses become cautious on spending as interest rates rise.

($1 = 0.8160 pounds)

(Reporting by Yadarisa Shabong in Bengaluru; Editing by Rashmi Aich and Saumyadeb Chakrabarty)