Software group Pinewood plummets after AI sell-off scuppers £575mn deal

Shares in UK software group Pinewood Technologies fell sharply on Monday after Apax Partners withdrew its £575mn takeover offer in the wake of market volatility fuelled by investor concerns about the impact of AI.

The FTSE 250 company’s shares sank almost a third to just under £3 after the private equity group on Friday said it had abandoned its offer, citing “prevailing challenging market conditions”.

Pinewood, which also calls itself Pinewood.AI, last month said its board had entered into talks with Apax about a possible cash offer of £5 a share.

Birmingham-based Pinewood develops software for car dealerships. The business says it combines “AI and data” to unlock customer value, streamline operations and increase the speed of decision-making.

The company said its board remained “very confident” about its long-term prospects, with Pinewood benefiting from high recurring revenues.

Apax’s decision follows sharp sell-offs in technology stocks in recent days as investors worry that AI could make many software businesses obsolete.

Fears that had been mounting over the past year intensified this month after the release of a new Anthropic AI model featuring tools to recreate software applications for legal and financial workers.

In the US, the tech-heavy Nasdaq Composite index has fallen more than 4 per cent in the past month and the S&P 500 is down 1.5 per cent.

Buyout firms and private credit groups in particular have bet vast amounts on software during the past decade. Takeovers of software companies by private equity funds have accounted for about 40 per cent of the trillions of dollars in deal activity, by some estimates. Such deals also represent nearly a third of lending in the fast-growing private credit industry.

The private capital sector has been particularly badly hit in the recent sell-offs, with Ares, Blue Owl, KKR and Blackstone all down a fifth or more over the past month.

KKR this month warned it might delay selling some assets if the market deteriorated, while Blue Owl said rising redemptions at its credit funds had caused the group to fall behind on its long-term growth targets.