By Rupert Hargreaves
Inchcape, the leading FTSE 250 global automotive distributor, has today announced the sale of its UK retail operations for £346m to Group 1 Automotive UK, a subsidiary of New York-listed Group 1 Automotive, Inc.
Inchcape’s UK retail operation employs 3,600 people and sells vehicles from 80 sites. It also has 12 original equipment manufacturer (OEM) partners.
In 2023, the retail operations generated revenue of £2.07bn, 18 per cent of the FTSE 250 company’s overall revenue. The arm delivered an operating profit of £49m for the group.
At the end of last year, the division had gross assets of £752m, which included £183m of freehold property and £336m of inventory. After debuting liabilities, the sale is expected to generate a gain for the group upon completion.
Inchcape said it will use £100m of the proceeds to fund a share buyback, expected to be completed within 12 months. The balance will be “used to invest in future growth, through organic investment and value-accretive acquisitions.”
The sale does not require Inchcape shareholders’ approval. It does require approval from the Financial Conduct Authority in relation to the change of control of the UK Retail operations’ regulated entity.
Duncan Tait, chief executive of Inchcape, said: “As we continue to deliver on our strategic ambition of becoming the leading global distribution partner to our OEM partners worldwide, this transaction represents a significant step along that journey.
He added: “This transaction aligns with our strategic priorities, simplifies our business and represents a compelling opportunity to deliver meaningful returns to our shareholders. We believe it will enhance the Group’s overall value proposition and enables us to drive growth and long-term value creation for all stakeholders as we further develop our differentiated distribution platform.
Daryl Kenningham, president and chief executive of Group 1 Automotive, said: ”We are delighted to have reached an agreement to acquire Inchcape’s UK Retail operations, which we have long admired given the company’s reputation for exceptional customer service, attractive portfolio of OEM brand partners and high-quality management team.”
