Car distribution firm Inchcape reaffirmed its commitment to the London Stock Exchange even as it sold its UK dealerships to a US firm for £346 million, leaving it with no remaining British operations.
The firm sold its UK dealerships to focus on distribution - the step between the manufacturer and dealer, which includes marketing, pricing and warehouse management. These operations, it said, offer higher margins.
In the UK, the brands Inchcape works with, like BMW and Toyota, handle their own distribution. As a result, the business will now have no UK operations, instead mostly focused on emerging markets in Latin America and Asia.
However, chief financial officer Adrian Lewis said the firm will keep selling its shares in London.
He said: “We are very happy with our listing in London. Just because we don’t have a UK retail operation does not mean we should be listed elsewhere.
“The London Stock market is a great place to list shares. We get investors that understand distribution and understand our markets.”
The sale of Inchcape’s 80 dealerships to Texas-based Group 1 Automotive, is the latest buyout of a British car dealership chain, following recent deals for Pendragon’s retail arm and Lookers.
Inchcape CEO Duncan Tait said: “As we continue to deliver on our strategic ambition of becoming the leading global distribution partner to our partners worldwide, this transaction represents a significant step along that journey.
“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.”
Daryl Kenningham, president and CEO of Group 1, said: ‘’With our considerable automotive retail experience in the United States and the UK, we look forward to building on Inchcape’s strong industry relationships and leveraging our expertise to support our combined operations in their next phase of growth.”
Inchcape will give £100 million of the sale proceeds back to shareholders via a buyback, and spend the remainder on growth. Lewis said the firm was targeting smaller “mom and pop” distribution firms in other emerging markets to buy out.
Inchcape shares rose by 29p, or 4.2%, to 727.5p this morning.
