Although Pinewood Technologies (PINE), the SAAS (software-as-a-service) provider to motor dealers, may not seem familiar to UK investors at first glance, it is simply the rump of the old Pendragon business following the sale of the UK motor and leasing division to North American dealership group Lithia (LAD:NYSE).

The shares have risen 140% over the last year after Lithia had to hike its offer from £280 million to almost £400 million to seal the deal, leaving Pinewood with a large cash pile which it promised to return to shareholders.

Last week the firm, which is currently valued at £675 million, confirmed it would hand back £358 million or more than half its market cap in the form of a 24.5p per share special dividend in early May.

As a standalone business, Pinewood is now a pure-play cloud software firm with gross margins close to 90%, high levels of recurring revenue and strong growth potential.

Lithia – which owns 20% of the shares – has agreed to transfer some 2,500 UK customers to Pinewood, which will underpin its domestic growth, while the longer-term plan is for the UK firm to access the much larger US market. 

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