US car dealer circles Inchcape’s showrooms

A NEW York-listed car dealership is circling the British retailer Inchcape in what could become the latest overseas swoop for London-listed assets.

Autonation, the largest car dealer in the US, is in the early stages of considering a bid for Inchcape’s UK operations, according to Sky News. It comes after Inchcape kicked off a strategic review at the start of the year.

Inchcape makes about 60pc of its revenue from distributing cars around the world, with the remainder coming from sales directly to drivers. The company runs showrooms for the likes of

Toyota, Volkswagen, BMW and Jaguar across the UK. Offloading the UK showroom operation would allow Inchcape to focus on the higher-margin distribution business. A deal would also give Autonation a foothold in the UK.

The $6.8bn company, which has about 245 showrooms across the US, was involved in a bidding war for the British dealership Pendragon last year, although it ultimately dropped out.

Inchcape’s UK dealership network could fetch £350m, according to the report. A swoop for the assets would represent yet another instance of an overseas buyer cherry-picking from the London Stock Exchange. The stock market has seen a string of foreign takeovers in recent months, including Mars’ takeover of Hotel Chocolat and the £1bn sale of the tech company Spirent Communications to a US rival.

Deals often come with hefty premiums to the prevailing share price, leading to criticism that British investors are undervaluing companies and leaving them ripe for takeovers. Inchcape declined to comment to Sky News.

Results published last month show the London-headquartered company made a pre-tax profit of £413m on sales of £11.4bn last year. Florida-based Autonation made a pre-tax profit of $1.35bn last year on revenues of $26.9bn.