Shares in Pendragon have lost more than a quarter of their value this morning after a European suitor withdraw its interest in taking over the owner of the Evans Halshaw chain of motor dealerships.

Sweden’s Hedin Mobility Group said it no longer intends to make an offer for Pendragon, having mooted in September a potential deal valuing the UK group at about £400 million. Hedin – which operates more than 200 showrooms across Belgium, Norway, Sweden and Switzerland – is Pendragon's largest shareholder with a 26 per cent stake in the business.

Pendragon, which also trades under the Stratstone brand, gave Hedin access to its books in October as it sought to firm up its possible cash offer of 29p per Pendragon share. However, the Swedish group has decided not to proceed because of the uncertain economic outlook.

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"The board remains confident about the long-term prospects of Pendragon," the group said. "This process has highlighted the value of Pendragon and the board will continue to explore opportunities to maximise value for its shareholders.

"As announced on 25 October 2022, there is a clear path to deliver the strategy to transform automotive retail through digital innovation and operational excellence. The economic backdrop remains challenging, however the board continues to expect to deliver group underlying profit before tax in line with expectations for the current financial year."

Shares in Pendragon were trading 7.8p lower at 20.4p as of noon.