Penske Corp. To Decrease Stake in Penske Automotive

The Bloomfield Hills, Michigan-based Penske Corporation announced it will reduce its stake in Penske Automotive Group Inc. from 40 percent to 35 percent. This will be done through a secondary offering of up to 5.75 million shares of common stock.

Penske Automotive is the world's second largest automotive dealership group, operating some 253 retail automotive franchises, 40 different brands and 40 repair centers. The company has 110 franchises in Great Britain operated through the Sytner Group, which it owns.

According to a report from Autonews, Penske Automotive Group (PAG) already filed documents with the U.S. Securities and Exchange Commission, seeking an offer price of $16.38 per share. The move could secure Penske Corporation a little over $94 million.

The benefits from the future transaction are planned to go to two shareholders, Penkse Corp. and International Motor Cars Group II LLC., with the latter looking to terminate its stake in the retailer. Penske Corp. said it will use the money raised from the sale for working capital.

After the transaction, Penske Corporation will still retain 31.8 million shares, accounting for around 35 percent of Penske Automotive Group Inc. With this, Penske Corporation and its Chairman, Roger Penske will still hold majority voting control over the retailer, as recently announced following a voting agreement.

Penske Corporation failed in 2009 to take over the Saturn brand from General Motors, after long negotiations that made Penske pull out citing manufacturing uncertainties. Penske Automotive Group and its dealerships managed to sell some 171,872 new vehicles in 2008.