Inchcape accelerates growth in South America with £234m deal

Car dealer Inchcape has acquired a distribution business focused on Subaru cars and Hino commercial vehicles in South America for £234m cash.

Covering Chile, Colombia, Peru and Argentina, the deal with Indumotora strengthens the FTSE 250 company's existing operations in the region and with the vehicle manufacturers, and is expected to be accretive to earnings in the first year of ownership by a mid to high single digit percentage.

For the current calendar year, the business generated revenues of £382m and adjusted EBITDA of £27m.

Inchcape, which completed the deal on Thursday morning using existing cash and committed debt facilities, said a number of Indumotora's other distribution relationships were included within the acquisition, including Suzuki in Argentina and commercial vehicle brand DFSK in Chile, Peru and Colombia, while Indumotora will retain its Kia business in Chile.

The London-listed company has been a distributor in South America for over 30 years and said the deal would provide strong complementary brand partners to its existing BMW presence in Chile and Peru, and long-term partnerships with Subaru and Hino in other continents.

"The acquisition of a scale distribution platform in South America is a compelling strategic and financial opportunity for Inchcape, consistent with our Ignite strategy," said chief executive Stefan Bomhard.

"The business is recognised as a high-quality operator, with a culture of customer service excellence, consistent with ours and I am very pleased to welcome Indumotora employees into Inchcape."