Inchcape to Sell UK Retail Operations to Group 1 for £346m

Automotive company Inchcape (LON: INCH) announced the sale of its UK retail operations to Group 1 Automotive UK Limited in a cash deal worth approximately £346 million. The move is said to align with Inchcape's strategy to focus on its higher-margin distribution business.

Group 1 has been operating in the UK since 2007, and its presence has grown over the years. It represents 15 OEM brands, and the majority of its 55 dealerships are based in the South East and East of England, where it employs around 3,300 people.

Inchcape's UK retail operations generated £2.065 billion in revenue in FY2023, representing 18% of the company's total revenue. Adjusted operating profit was £49 million.

The transaction is expected to be completed in the third quarter of 2024 and will result in a gain on disposal for Inchcape.

Following the sale, Inchcape plans to return £100 million to shareholders through a share buyback program within a year. The remaining proceeds will be used for further investment in its core distribution business.

Inchcape's CEO, Duncan Tait, said the sale allows them to become “the leading global distribution partner” and frees up resources for “growth and long-term value creation.”

Group 1, an existing player in the UK market with over 55 dealerships, sees the acquisition as an opportunity to leverage Inchcape's “strong industry relationships” and expertise.