AutoNation reportedly looking at Inchcape's UK retail auto operations

AutoNation Inc. is reportedly exploring a possible bid to buy the United Kingdom operations of Inchcape, an automotive retail, distribution and services company with a presence in more than 40 markets globally.

According to a report from Sky News citing "industry sources," AutoNation is in the early stages of exploring a potential bid. The story did not name other possible suitors.

The report of AutoNation's possible interest follow the British company's Jan. 29 announcement that it was reviewing strategic options for its U.K. retail business, including a possible sale. The news comes about six months after AutoNation declined to make a formal bid for U.K. auto retailer Pendragon, which Lithia Motors has since acquired. That deal closed in late January.

AutoNation did not respond to requests for comment. An Inchcape spokesperson would only tell Automotive News: "We note the speculation but do not have any comment to make."

AutoNation last fall explored making an offer for Pendragon. Pendragon had said in a regulatory filing that it received an unsolicited proposal from AutoNation to acquire the company for 32 pence, or 39 cents, per share in cash. Reuters valued the AutoNation offer at $544.2 million.

As other bids surfaced, AutoNation announced in October it would not make a formal offer, which made way for Lithia. Lithia bought Pendragon's 160 stores, most of which were new-vehicle dealerships; its fleet business; and a piece of its dealership management system, Pinewood, for $482 million.

Executives said during AutoNation's 2023 fourth-quarter earnings call that they were still keeping an eye out for acquisitions in both the U.S. and overseas.

"We liked what we saw with Pendragon at that price we had indicated in the marketplace, and at that point, we thought it was good — but clearly that was not for us," AutoNation CEO Mike Manley said during the Feb. 13 call. He added that "we have a number of opportunities at this time."

Steve Young, managing director of U.K. auto retail analyst firm ICDP, said AutoNation's interest in Inchcape would make sense in light of its pursuit of Pendragon.

"Their interest in the U.K. market was clearly triggered or brought up the priority list by their involvement in their ultimately unsuccessful bid for Pendragon," Young told Automotive News via email. "Since they withdrew from that contest, I anticipated that they would at some point return to make another acquisition for the same reasons that they and Lithia looked at Pendragon initially — relatively more attractive valuations here compared to the U.S., restrictions on growth in attractive markets in and brands in the U.S., advantageous exchange rates and a sophisticated retail environment."

AutoNation, of Fort Lauderdale, Fla., ranks No. 2 on Automotive News' list of the top 150 dealership groups based in the U.S., with retail sales of 229,971 new vehicles in 2022.