# Inchcape Sells Fleet Solutions for £100m

- Link: https://www.directorstalkinterviews.com/inchcape-sells-fleet-solutions-for-100m/412795173
- Published: 2019-10-10T07:24:59+01:00
- Author: Giles Arbor

**Inchcape plc** (LON: INCH), the leading independent multi-brand automotive Distributor
with global scale, has announced that it has agreed to sell its Inchcape Fleet Solutions
business to Toyota Fleet Mobility GmbH for total cash consideration of £100m. It
follows recent disposals of less productive dealerships in the UK, and Retail-only
disposals in Australia and China. Inchcape is focused on its core Distribution operations
and these disposals have meaningfully streamlined the Group along those lines.

The IFS business leases fleet vehicles and provides fleet management services to
B2B customers including Toyota. The scope of the business means there is limited
synergy with Inchcape’s UK retail dealership business, where Inchcape acts as a 
franchisee of brands including BMW, MINI, JLR, Mercedes, VW, Audi, Porsche, Toyota
and Lexus. The UK Retail dealership business remains strategically important to 
the Group, where Inchcape is a top five partner for key OEM partners, supporting
the expansion of Group Distribution contracts since 2016.

The transaction consideration is payable in cash at completion and will give rise
to a gain on disposal. In the year to December 2018, IFS contributed revenue of 
£60m and trading profit of £9m. The gross assets of IFS, as included within the 
Inchcape Group consolidated balance sheet, as at 30 June 2019 were £78m. The transaction
is expected to complete in Q4 2019 and as such the impact on Inchcape’s 2019 trading
profit will be minimal.

The use of the proceeds will be consistent with Inchcape’s existing capital allocation
policies under the Ignite strategy whereby the focus is on growing both organically
and inorganically, with any surplus cash returned to shareholders. These capital
allocation options are assessed on a regular basis.

Together, the disposal of IFS, six Retail sites in Australia, three Retail sites
in China and seven Retail sites in the UK will generate c.£250m of cash inflow to
the Group with an overall significant net gain on disposal and on a combined trading
profit base of c.£18m.

**Stefan Bomhard, Group CEO of Inchcape plc, commented:**

>  “This transaction is a further demonstration of strategic progress and focus 
> on our core Distribution activities which generate 90% of Group trading profit.
> We are pleased to have been able to further streamline our UK Retail market activities
> by selling IFS at a good valuation. We remain focused on our Ignite strategy which
> frames our operational excellence initiatives, has driven 10 Distribution deals
> since 2016, and sets the foundations for capabilities that will enable us to position
> Inchcape well for the future. I would like to thank our IFS team for all their
> hard work and dedication and wish them success under Toyota, Inchcape’s oldest
> OEM partner.”

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