HOUSTON - Group 1 Automotive, Inc. (NYSE: NYSE:GPI), a Fortune 300 company and a leading automotive retailer, today confirmed its plans to purchase the United Kingdom automotive retail business from Inchcape (OTC:INCPY) plc. The acquisition, valued at approximately $439 million, includes 54 dealership locations and is set to enhance Group 1's presence in the U.K. market.
The all-cash transaction, which also encompasses related real estate valued at $279 million, is contingent upon approval from the Financial Conduct Authority and is expected to be finalized in the third quarter of 2024. The Inchcape U.K. dealerships involved in the deal generated around $2.7 billion in annual revenues in 2023.
Daryl Kenningham, President and CEO of Group 1, expressed enthusiasm for the expansion, citing Inchcape's reputable brand mix and geographic synergy with Group 1's existing operations. The acquisition is anticipated to bolster Group 1's U.K. dealership count to 109 and its overall count to 256 locations across the U.S. and U.K.
Daniel McHenry, Group 1's Senior Vice President and CFO, emphasized the transaction's strategic significance, noting that it would substantially increase the company's scale in the U.K. while maintaining a healthy leverage ratio and liquidity for ongoing capital allocation strategies.
Group 1 has already completed $1.0 billion in acquired revenues year to date, and with this acquisition, it expects to reach approximately $3.7 billion in total acquired revenues by the anticipated closing date.
Additional details regarding the acquisition will be discussed during Group 1's earnings call on April 24, 2024.
J.P. Morgan Securities LLC served as the exclusive financial adviser, while Dentons UK and Middle East LLP provided legal counsel to Group 1 for this transaction.
This move is part of Group 1's broader strategy to expand its dealership network and services, which includes selling new and used vehicles, vehicle financing, service and insurance contracts, as well as automotive maintenance and repair services.
The information in this article is based on a press release statement from Group 1 Automotive, Inc.
InvestingPro Insights
As Group 1 Automotive, Inc. (NYSE: GPI) sets its sights on expanding its U.K. operations, the company's financial health and market performance provide key insights for investors monitoring the automotive sector. With a market capitalization of $3.55 billion, Group 1 Automotive is trading at a low earnings multiple, with a P/E ratio of 6.27, indicating that its stock could be undervalued relative to its earnings power. Adjusted for the last twelve months as of Q4 2023, the P/E ratio is even more attractive at 5.78. This aligns with an InvestingPro Tip highlighting the company's trading at a low earnings multiple.
Group 1's revenue growth remains robust, with a 10.18% increase in the last twelve months as of Q4 2023. This growth is a testament to the company's expanding operations and market reach, potentially further bolstered by the recent acquisition. Another notable InvestingPro Tip for Group 1 is its consistent dividend track record, having raised its dividend for 3 consecutive years and maintained payments for 15 consecutive years. The dividend yield currently stands at 0.67%, with a significant growth of 20.51% in the last twelve months as of Q4 2023.
Investors interested in deeper analysis and additional InvestingPro Tips can find more information and comprehensive metrics on Group 1 Automotive at https://www.investing.com/pro/GPI. There are a total of 8 additional tips listed in InvestingPro that could further inform investment decisions. To access these insights, use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
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