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(Alliance News) - Inchcape PLC on Monday announced a deal to sell its UK retail operations of GBP346 million, following a review of strategic options it kicked off earlier this year.
The London-based automotive distributor said it will sell the assets to New York-listed automotive retailer Group 1 Automotive.
It noted that Group 1 has operated in the UK since 2007 and has a "growing presence in the UK."
Inchape said: "The disposal of the group's UK Retail operations will complete Inchcape's transformation into a substantially distribution-focussed business. This is in fulfilment of Inchcape's strategic decision to focus on its higher margin, capital-light, high returns, cash generative global distribution business. The distribution value chain includes such elements as product planning, logistics, channel management and aftersales, while retail is specifically focused on car dealerships."
Inchcape plans to return GBP100 million of the disposal proceeds to shareholders through a buyback.
"The remaining proceeds will be used to invest in future growth, through organic investment and value-accretive acquisitions," it added.
The transaction is expected to be completed in the third quarter of this year.
Inchcape Chief Executive Duncan Tait 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. Our UK Retail business is a high-quality business, with an experienced and high-performing management team, and has been an important part of the group's growth. With our active international expansion into higher value distribution activities, the strategic importance of the UK retail operations has become limited. The board has therefore concluded it is the right time for a new owner to take this business forward."
Shares in Inchcape were up 3.8% to 725.00 pence each in London on Monday morning.
By Sophie Rose, Alliance News senior reporter
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