In major news on UK stocks, Inchcape PLC (GB:INCH) shares gained over 4% as of writing, after the company announced the sale of its UK retail arm to Group 1 Automotive UK, a subsidiary of U.S.-based Group 1 Automotive, Inc. (NYSE:GPI). The deal, which is valued at £346 million, represents a significant milestone in the company’s transition toward a distribution-focused business model.
Inchcape PLC holds a leading position in the premium and luxury automotive services space. It provides services like product planning, logistics, marketing, and aftermarket solutions to leading automotive brands.
Inchcape’s Distribution Pivot
In January, Inchcape unveiled a strategic plan, stating that it was reviewing options for its UK retail business. The company emphasized that its shift towards a predominantly distribution-oriented business will drive increased profitability and a lighter capital structure, along with comparatively better margins, and cash generation.
Moving forward, the company plans to focus on leveraging the capabilities of a unique distribution platform for its OEM partners, blending cutting-edge technology, and strong local knowledge. Moreover, retail operations will also continue to play a crucial role in specific regions.
In Fiscal 2023, Inchcape’s UK retail operations contributed £2.06 billion in revenue, accounting for 18% of the company’s total revenue, and representing 7% of the total operating profit.
The company further stated that upon completion of the transaction, £100 million of the proceeds will be allocated to Inchcape shareholders via a share buyback initiative, scheduled to conclude within a 12-month timeframe. The deal is anticipated to be finalized in the third quarter of this year, pending regulatory approval.
What is the Price Target for Inchcape?
Based on analysts’ assessments available on TipRanks, INCH stock has received a Strong Buy rating, backed by all Buy recommendations from five analysts. The Inchcape share price prediction is 1,095.20p, which implies an upside of 50% from the current price.
