15 April 2024
THIS
ANNOUNCEMENT AND THE INFORMATION HEREIN IS NOT FOR RELEASE,
PUBLICATION OR DISTRIBUTION IN ANY JURISDICTION WHERE TO DO SO
WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF SUCH
JURISDICTION
THIS
ANNOUNCEMENT INCLUDES INSIDE INFORMATION
Disposal
of UK Retail operations
Inchcape
plc to sell its UK Retail operations to Group 1 for cash
consideration of approximately £346m
Transaction highlights
·
Inchcape plc ("Inchcape" or
"the Group") agrees the sale of its UK Retail operations to Group 1
Automotive UK Limited for cash consideration of approximately
£346m;
· Transaction consistent with Inchcape's strategic focus on
higher margin, capital-light, cash generative, diversified,
scalable and global Distribution business. Following the disposal,
Inchcape will substantially be a Distribution-focussed
business;
·
Following completion of
transaction, expected during Q3 2024, it is intended that £100m of
the proceeds will be returned to Inchcape shareholders by means of
a share buyback programme, which is expected to be completed within
12 months.
Inchcape, the leading global
automotive distributor, today announces that, following a review of
strategic options announced in January 2024, it has agreed to sell
its UK Retail operations to Group 1 Automotive UK Limited, a
wholly-owned subsidiary of Group 1 Automotive, Inc. (NYSE: GPI),
("Group 1"), for a cash consideration of approximately
£346m.
Information on Inchcape's UK
Retail operations and Group 1
In FY2023, Inchcape's UK Retail
operations generated revenue of £2,065m, 18% of Group revenue, and
adjusted operating profit of £49m[1], 7% of
Group operating profit. Inchcape's UK Retail operations employ
around 3,600 people in over 80 sites in the UK, with 12 OEM
partners. The gross assets of Inchcape's UK
Retail operations as at 31 December 2023 were £752m (including
£183m of freehold property and £336m of inventory) and after
deducting liabilities, the transaction is expected to result in a
gain on disposal.
Group 1 has operated in the UK since
2007 and has a growing presence in the UK, representing 15 OEM
brands, with the majority of its 55 dealerships in the UK based in
the South East and East of England, where it employs around 3,300
people. Group 1 represents 35 OEM brands, across 202 dealerships,
employing approximately 16,000 people. Group 1 generated revenue of
$18 billion in FY 2023, of which its UK business contributed $3
billion.
Planned use of proceeds and
transaction process
Following completion of the
transaction, it is intended that £100m of the proceeds will be
returned to shareholders by means of a share buyback programme,
which is expected to be completed within 12 months. The remaining
proceeds will be used to invest in future growth, through organic
investment and value-accretive acquisitions.
The transaction is conditional only
upon regulatory approval from the Financial Conduct Authority in
relation to the change of control of the UK Retail operations'
regulated entity and is expected to complete during Q3
2024.
The transaction constitutes a Class
2 transaction for the purposes of the UK Financial Conduct
Authority's Listing Rules and, as such, does not require Inchcape
shareholders' approval.
Inchcape's UK Retail operations will
be accounted for as an asset held-for-sale and a discontinued
operation following completion.
Strategic rationale of
transaction for Inchcape
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. The
Group's Distribution business will continue to retain elements of
automotive retail within its infrastructure in certain markets, as
appropriate, where it drives economic and commercial value for
Inchcape and its OEM partners.
As part of the Group's strategic
approach, since 2016, Inchcape has divested approximately £2.4
billion of Retail revenue. Following completion of this
transaction, the Group's Distribution activities will account for
over 99% of its global revenue and operating profit.
As the automotive landscape evolves
and the challenges facing the Group's OEM partners become more
complex, OEMs are seeking technology-enabled distribution solutions
to develop their brands. Inchcape's differentiated distribution
platform encompasses advanced digital and data capabilities, global
presence, local insights and customer-centric innovation to unlock
opportunities for OEM partners in complex markets. For Inchcape,
this enhanced focus on distribution represents a compelling
multi-year growth and value creation opportunity.
Duncan Tait, Group Chief Executive of Inchcape,
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.
"This transaction aligns with our
strategic priorities, simplifies our business and represents a
compelling opportunity to deliver meaningful returns to our
shareholders. We believe it will enhance the Group's overall value
proposition and enables us to drive growth and long-term value
creation for all stakeholders as we further develop our
differentiated distribution platform.
"In Group 1, our UK Retail
operations will have a new owner with a strong track record of
industry growth, existing presence and retail experience in the UK
market and a strong balance sheet. I am grateful to our UK
colleagues for building such a high-quality automotive retail
network and I'm confident that the business will continue to excel
under Group 1's ownership."
Daryl Kenningham, President and Chief Executive Officer of
Group 1 Automotive, said: ''We are
delighted to have reached an agreement to acquire Inchcape's UK
Retail operations, which we have long admired given the company's
reputation for exceptional customer service, attractive portfolio
of OEM brand partners and high-quality management team. 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."
A copy of this announcement will be
available at www.inchcape.com. Inchcape will publish a trading
update for Q1 2024 on Thursday 25th April 2024, at 07:00
(UK time).
Contacts
N.M. Rothschild & Sons Limited
("Rothschild & Co") is acting as the sole financial adviser to
Inchcape Management (Services) Limited in connection with the
Transaction. Herbert Smith Freehills is
acting as legal adviser to Inchcape on the Transaction.
About Inchcape
Inchcape is the leading global
automotive distributor, with operations across six
continents.
By combining our in-market expertise
with our unique technology and advanced data analytics, we create
innovative customer experiences that deliver outstanding
performance for our partners - building stronger automotive brands
and creating sustainable growth.
Our distribution platform connects
the products of mobility companies with customers, and our
responsibilities span product planning and pricing, import and
logistics, brand and marketing to operating digital sales, managing
physical sales and aftermarket service channels.
Delivering for our partners, our
customers and our people - so they can realise their ambitions in
the new world of mobility.
The Group is headquartered in London
and employs around 22,000 people globally.
www.inchcape.com
About Group 1 Automotive, Inc.
Group 1 owns and operates 202
automotive dealerships, 265 franchises, and 43 collision centers in
the United States and the United Kingdom that offer 35 brands of
automobiles. Through its dealerships and omni-channel platform, the
Company sells new and used cars and light trucks; arranges related
vehicle financing; sells service and insurance contracts; provides
automotive maintenance and repair services; and sells vehicle
parts.
Group 1 discloses additional
information about the Company, its business, and its results of
operations at www.group1corp.com, www.group1auto.com,
www.group1collision.com, www.acceleride.com,
www.facebook.com/group1auto, and
www.twitter.com/group1auto.
Important notices
This Announcement contains inside
information for the purposes of Article 7 of the Market Abuse
Regulation (EU) 596/2014 as it forms part of the United Kingdom's
domestic law by virtue of the European Union (Withdrawal) Act 2018
("UK MAR") and is issued on behalf of the Company by Tamsin
Waterhouse, Group Company Secretary. This Announcement is issued at
0700 BST on 15 April 2024. This Announcement is not intended to,
and does not constitute, or form part of, any offer to sell or
issue or any solicitation of an offer to purchase, subscribe for,
or otherwise acquire, any securities or a solicitation of any vote
or approval in any jurisdiction.
Rothschild & Co is authorised
and regulated by the FCA in the United Kingdom and is acting
exclusively for Inchcape Management (Services) Limited and no one
else in connection with the contents of this Announcement and any
other matters referred to in this Announcement and will not regard
any other person(s) (whether or not a recipient(s) of this
Announcement) as a client(s) of Rothschild & Co in relation to
any other matter(s) referred to in this Announcement and will not
be responsible to anyone other than Inchcape Management (Services)
Limited for providing the protections afforded to clients of
Rothschild & Co, or for providing financial advice, in relation
to the contents of this Announcement or any other matter(s) or
arrangement(s) referred to in this Announcement.
Rothschild & Co does not accept
any responsibility whatsoever for the contents of this
Announcement, including its accuracy, completeness or verification,
or for any other statement made or purported to be made by
Rothschild & Co, or on Rothschild & Co's behalf, in
connection with the Company, Inchcape and/or any other
transaction(s) or arrangement(s) referred to in this Announcement.
Rothschild & Co accordingly disclaims, to the fullest extent
permitted by applicable law, all and any duty, liability or
responsibility whatsoever whether arising in tort, contract or
otherwise, which Rothschild & Co might otherwise have in
respect of this Announcement or any such statement. No
representation or warranty, express or implied, is made by
Rothschild & Co and/or any of Rothschild & Co's respective
affiliates as to the accuracy, completeness, verification or
sufficiency of the information set out in this Announcement, and
nothing in this Announcement will be relied upon as a promise or
representation in this respect, whether or not to the past or
future, provided that nothing in this paragraph shall seek to
exclude or limit any responsibilities or liabilities which may
arise under the Financial Services and Markets Act 2000 or the
regulatory regime established thereunder.
Cautionary statement regarding forward-looking
statements
This Announcement may contain
"forward-looking statements" with respect to certain of the
Company's plans and its current goals and expectations relating to
its future financial condition, performance, strategic initiatives,
objectives and results. Forward-looking statements sometimes use
words such as "aim", "anticipate", "target", "expect", "estimate",
"intend", "plan", "goal", "believe", "seek", "may", "could",
"outlook" or other words of similar meaning. By their nature, all
forward-looking statements involve risk and uncertainty because
they are based on numerous assumptions regarding Inchcape's present
and future business strategies, relate to future events and depend
on circumstances which are or may be beyond the control of Inchcape
and/or Group 1 and which could cause actual results of trends to
differ materially from those made in or suggested by the
forward-looking statements in this Announcement, including, but not
limited to, domestic and global economic business conditions;
market-related risks such as fluctuations in interest rates; the
policies and actions of governmental and regulatory authorities;
the effect of competition, inflation and deflation; the impact of
legislative, fiscal, tax and regulatory developments in the
jurisdictions in which Inchcape and Group 1 and their respective
affiliates operate; the effect of volatility in the equity, capital
and credit markets on profitability and ability to access capital
and credit; a decline in credit ratings of Inchcape and/or Group 1;
the effect of operational and integration risks; an unexpected
decline in revenues for Inchcape or Group 1; inability to realise
anticipated synergies; any limitations of internal financial
reporting controls; and the loss of key personnel. Any
forward-looking statements made in this Announcement by or on
behalf of Inchcape speak only as of the date they are made. Save as
required by the UK MAR, the Disclosure Guidance and Transparency
Rules, the Listing Rules or by law, the Company undertakes no
obligation to update these forward-looking statements and will not
publicly release any revisions it may make to these forward-looking
statements that may occur due to any change in its expectations or
to reflect events or circumstances after the date of this
Announcement.