(Sharecast News) - Shares in Inchcape raced ahead on Monday after the automotive distributor announced the disposal of its UK Retail operations to Group 1 Automotive UK for £346m.
The deal, which does not need approval from Inchcap's shareholders, is part of the company's strategy to focus on being a "higher margin, capital-light, cash generative, diversified, scalable and global distribution business", the company said in a statement.
UK Retail generated just over £2bn in sales for Inchcape in 2023, equal to 18% of group revenues, but the strategic importance of the operations "has become limited", according to chief executive Duncan Tait.
After the completion of the disposal, expected to happen in the third quarter, Inchcape will then hand £100m back to shareholders by way of a share repurchase over the following 12 months. The rest of the money will be used to fund future growth.
"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," said Tait.
"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."
Shares were up nearly 4% at 725.5p by 0834 BST.
Inchcape (INCH)