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Inchcape takes over prestige dealer group

Inchcape has acquired a dealer group with 22 sites representing premium and luxury car brands.

The London-based international motor retailer will take over Trivett Automotive Group in Australia on March 1 in a £78m cash deal.

Trivett has 22 dealerships in the Sydney area and represents brands including BMW, Honda, Jaguar, Land Rover, Volvo, Rolls-Royce, Bentley, Aston Martin and McLaren.

It sells 9,000 vehicles per year, and 2012 revenue was £390m with EBIT of £12m. It has 10 freehold properties.

Analyst Mike Allen of Panmure Gordon said the deal looks "reasonable value".

He added: "We believe the acquired assets are reasonably well invested and therefore do not foresee any material capital expenditure requirements on the back of this. We would expect this transaction to be EPS neutral in 2013 as acquisition costs can longer be capitalised, but should enhance 2014E by 3-4% assuming a £10m PBT contribution."

This transaction adds further scale to Inchcape’s Australian business, which benefits from attractive automotive demand characteristics and robust economic fundamentals. Inchcape has been operating in Australia since 1992 and sells approximately 50,000 vehicles in the country through its distribution and retail network.

The Australian new vehicle market is strong, with growth in the wealthy metropolitan areas and the mining territories. 2012 saw the new vehicle market grow by over 10% year on year to 1.1m units, a record level.

André Lacroix, group chief executive of Inchcape, said: "This is a significant step in the development of our operations in Australasia, giving us the opportunity to build further scale with premium and luxury brands represented in high quality retail centres in Sydney.

"The transaction is in line with our strategy of expansion in Asia Pacific and Emerging Markets with luxury and premium brand partners. Trivett is a high quality operation and an excellent fit for Inchcape.

"We will leverage our deep market knowledge, strong operational capability and superior processes to deliver outstanding customer service for our brand partners and to drive value for our shareholders.”

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