Group 1 Makes Power Move in UK Market with Inchcape Auto Dealerships Buy Out

Lekha Gupta

April 15, 2024

Group 1 Automotive, Inc. (NYSE:GPI) disclosed a deal to buy the U.K. automotive retailing business and related owned real estate from a subsidiary of Inchcape PLC (OTC:IHCPF) for around $439 million (£346 million) in an all-cash transaction.

The acquisition price includes $279 million (£220 million) of appraised real estate value.

In 2023, the Inchcape U.K. dealerships generated approximately $2.7 billion (£2.1 billion) in annual revenues.

The transaction is expected to close in the third quarter of 2024, subject to the receipt of approval from the Financial Conduct Authority.

Daryl Kenningham, Group 1’s President and CEO, said, “Inchcape’s brand mix is outstanding. These new stores complement our geographic footprint in the East and South East of England and enable us to expand into new markets in the Central and North West regions of England and Wales.”

Daniel McHenry Group 1’s Senior Vice President and CFO, stated, “While this transaction provides a transformation in scale for our company in the U.K., our U.S. credit facility pro-forma leverage ratio will be approximately 2.2x after taking into account the financing of this transaction with debt and cash on hand, and liquidity remains comfortably within our targets.”

Year to date, in 2024, Group 1 has closed $1.0 billion of acquired revenues. With this proposed acquisition, the total acquired revenues are projected to be around $3.7 billion at the closing date.

Also, the buyout raised Group 1’s U.K. dealership count to 109 across 256 locations in the U.S. and U.K.

With 54 dealership locations across major hubs in England and Wales, Inchcape’s U.K. dealership portfolio sells over 63,500 new and used vehicles and 24,000 corporate units annually on an aggregate basis.

Investors can gain exposure to the stock via Northern Lights Fund Trust IV Inspire Momentum ETF (NYSE:GLRY) and Invesco S&P SmallCap Consumer Discretionary ETF (NASDAQ:PSCD).

Also Read: Group 1 Automotive To Leverage Higher Demand In US And UK Despite Pressured Margins: Analyst Forecasts

Price Action: GPI shares closed lower by 0.42% at $269.44 on Friday.

Image sourced from Shutterstock

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