Investment: Inchcape's new break-up plan

FIVE MONTHS after break-up plan mark one was launched, Inchcape has now introduced an even shinier new model. And this time there is even more to whet the appetite for shareholders at the previously struggling car distribution to marketing group.

Plans to demerge the Latin American bottling interests - leaving investors with shares in a Santiago-listed company - have been shelved. Instead, Inchcape is now talking about a cash sale of the division to Coca-Cola- backed Embotelladora Arica of Chile. It has in the process of agreeing the sale of the loss-making Russian bottling operation for $187m (pounds 115m), also to Coca-Cola.

The shipping services division has four potential buyers lined up, while there are new plans to sell off the Asia-Pacific and Middle East marketing operations separately.

More good news came with interim pre-tax profits which rose from from pounds 65m to pounds 69.1m. However, headline earnings per share were down from 8.1p to 6.1p as a result of the Asian downturn, the effect of sterling and Inchcape's decision to cut its shareholding in Toyota (UK) from 75 to 49 per cent.

But Inchcape has weathered the Asian storm relatively well and the core motor division - which will be left when the restructuring is completed early next year - appears to have sound prospects.

The share price took wing yesterday, soaring 19.5p to 195.5p as the company promised "substantial" cash handouts to shareholders next year. Depending on how much they think the disposals will fetch, analysts are using figures of 265p to 270p as a break-up value. That still makes the share price look cheap. But remember that the latest plans are not yet done deals: the shares are fairly valued at this level.

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