Inchcape agrees to buy European Motor Holdings

Car retailer Inchcape Plc said it had agreed to buy smaller rival European Motor Holdings Plc for £263 million and signalled it had not yet finished making British acquisitions.

The company said it would pay 480 pence a share in cash for EMH, an 18.5 per cent premium on EMH's closing price on December 4 - the day before EMH confirmed it was in takeover talks.

Inchcape Chief Executive Andre Lacroix said the deal would give the company significant presence in the north of England, allowing it to lead further consolidation in years to come.

"We now have a strong geographic footprint, so we can look at further consolidation opportunities in the right brand and right region," he said in a conference call.

The group's main target is the luxury car market, the fastest growing sector in the industry, he said.

"The EMH deal increases our share of the UK premium market from 5.4 per cent to 8.4 per cent. There are plenty of future opportunities."

Inchcape bought privately owned British dealer Lind for £108 million in May. Further activity in the sector includes Pendragon's purchase of Reg Vardy in February and its subsequent failure to buy Lookers.

Before any more deals, however, Lacroix said he wanted to simplify Inchcape's newly enlarged British division on the back of the EMH deal, including information technology and back office alterations and a simplification of the number of brands.

"We have 22 brands now. We want fewer, larger-scale relationships," he said, declining to comment on his target cost savings or the number of jobs and dealerships that could go.

EMH said in October it had appointed Goldman Sachs to conduct a review of the business, prompting early speculation that it would be sold. As well as Inchcape, Lookers and property investor Robert Tchenguiz were reported in the press to be interested.