Transaction Highlights:
- Exit of the Retail-only business in mainland China with three sites disposed
- Refocusing of Asia regional resource on Distribution markets
Inchcape plc (LON: INCH), the leading independent multi-brand Automotive Distributor with global scale, today announced that it has agreed to sell its three Retail sites in mainland China to China Yongda Automobiles Services Holdings Limited for net cash proceeds of £54m1. This follows recent rationalisation in Australia and the UK to optimise our Retail-only portfolios. Together with the announced UK and Australia disposals earlier this year Inchcape will receive a cash inflow of c.£150m through the disposal of the combined 16 sites.
Today’s announcement is consistent with the Group’s focus on core Distribution capabilities, which has been enabled by the Ignite strategy, and on the disciplined utilisation of capital. Inchcape does not have a scale presence in China and as a Retail-only market these assets are less strategic to Inchcape’s global growth strategy. China has been Inchcape’s only exposure to Retail-only operations in Asia and this transaction will see the Group exit China.
The sites comprise Lexus in Shaoxing, Porsche in Nanchang and Mercedes-Benz in Jiujiang, and their disposal will enable Inchcape to refocus its regional resources on the more attractive Distribution markets. Prospects for Inchcape’s Distribution business across Asia remain highly attractive and the region a key contributor to the Group.
Net cash proceeds of £54m represents a gain on book value. The transaction is expected to complete by Q1 2020 and is conditional upon final OEM partner and regulatory approvals. Given the timing of completion we expect minimal impact to 2019’s trading profit with the business expected to contribute c.£9m to Group trading profit.
- Exact net cash proceeds subject to completion adjustments.
Stefan Bomhard, Group CEO of Inchcape plc, commented:
“The disposal of our three remaining sites in mainland China marks a further shift towards focusing on our core Distribution business model, thereby allocating our resources towards more attractive profit pools in the Asia region. Through the Ignite strategy, our focus is on growing both organically and inorganically in Distribution as evidenced through the 10 businesses we have won and acquired since 2016. The global opportunities for Inchcape are exciting; whilst we exit three Retail sites in China today, through our acquisitions to date we have become a top 5 Distributor of Chinese OEMs across the markets we operate in Latin America. We remain focused on ensuring we are driving value for shareholders today and for the future.”
