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(Alliance News) - Inchcape PLC on Thursday announced the GBP100 million cash sale of its Inchcape Fleet Solutions business to Toyota Fleet Mobility GmbH, part of Toyota Motor Co.
Automotive distributor Inchcape said it wants to focus on its core distribution operations. This disposal, as well as previous disposals of its "less productive dealerships in the UK" and retail-only units in China and Australia, have helped it to streamline.
Including the deal announced Thursday, these disposals are expected to generate around GBP250 million of cash for Inchcape, "with an overall significant net gain on disposal" plus a combined trading profit base of approximately GBP18 million.
Inchcape Fleet Solutions is a business-to-business unit leasing fleet vehicles, as well as providing fleet management services, and Toyota Fleet Mobility is among its customers.
According to Inchcape, the fleet solutions arm has "limited synergy" with the company's UK Retail dealerships - in which Inchcape acts as franchisee for automotive brands such as Porsche, Audi, and BMW. UK Retail remains strategically important.
The GBP100 million is due on completion and Inchcape will make a gain on disposal. The unit contributed GBP60 million of revenue and had a GBP9 million trading profit in 2018, and its gross assets as at June 30 were carried on the Inchcape balance sheet at GBP78 million.
The deal is scheduled to complete in the fourth quarter of 2019, so annual trading profit will be only minimally hurt.
Inchcape said it will use the money from the sale for inorganic and organic growth with surplus cash, if any, returned to shareholders.
"This transaction is a further demonstration of strategic progress and focus on our core Distribution activities which generate 90% of group trading profit. We are pleased to have been able to further streamline our UK Retail market activities by selling [Inchcape Fleet Solutions] at a good valuation," said Chief Executive Stefan Bomhard.
"We remain focused on our Ignite strategy which frames our operational excellence initiatives, has driven 10 Distribution deals since 2016, and sets the foundations for capabilities that will enable us to position Inchcape well for the future. I would like to thank our IFS team for all their hard work and dedication and wish them success under Toyota, Inchcape's oldest OEM partner," he added.
Shares in Inchcape were up 0.7% at 610.00 pence in London on Thursday morning.
By Anna Farley; annafarley@alliancenews.com
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