Pinewood.AI Acquires Lithia's Stake in North America JV
Why we think this is good
The acquisition of Lithia's majority stake in the North America joint venture is a positive development for Pinewood.AI, as it unlocks significant strategic and commercial opportunities in the lucrative North American market. The transaction is supported by a third-party valuation, and the company has secured a five-year contract with Lithia for the roll-out of its platform across Lithia's North American dealerships, providing multi-year revenue visibility. While there are some execution risks and dilution for existing shareholders, the overall strategic rationale and financial potential of the acquisition outweigh these concerns.
Key Points
- Pinewood.AI to acquire Lithia's 51% stake in North America joint venture for $76.5 million
- Acquisition expected to unlock growth opportunities in the $6.5 billion US dealer software market
- Five-year contract secured with Lithia for roll-out of Pinewood.AI's software across Lithia's North American dealerships
- Initial annual recurring revenue from Lithia expected to be around $40 million, potentially increasing to $60 million
Summary
Pinewood.AI has agreed to acquire Lithia's 51% stake in their North America joint venture for $76.5 million, to be satisfied through the issue of new ordinary shares. The acquisition is expected to unlock significant strategic and commercial opportunities for Pinewood.AI in the lucrative $6.5 billion North American automotive dealer software market, where the company is currently on track to pilot its platform in Lithia's US stores in the second half of 2025. Pinewood.AI has also secured a five-year contract with Lithia to roll-out its software across all of Lithia's current and future sites in the US and Canada by the end of 2028, which is expected to generate around $40 million in annual recurring revenue initially, potentially increasing to $60 million with additional North America-specific applications.