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Leading international law firm Herbert Smith Freehils is advising Inchcape plc, the leading independent multi-brand global automotive distributor, on its business combination to acquire Derco, the largest independent automotive distributor in Latin America, for a cash and share consideration valuing Derco at £1.3 billion on a debt free, cash free basis. 

Derco, which is almost exclusively family-owned, has significant presence across Chile, Peru, Colombia and Bolivia and has long-standing partnerships with global automotive brands such as Suzuki, Mazda, Renault, Changan, JAC, Great Wall and Haval. 

The transaction will be financed via a mixture of debt, cash at bank and the issue of new Inchcape plc shares, which will give the family sellers an aggregate shareholding of approximately 9.3% in Inchcape. As part of this, Herbert Smith Freehills also advised Inchcape on obtaining new bridge loan and term loan facilities of £600 million to partially fund the cash element of the consideration. 

Due to its size, the transaction is a Class 1 Transaction under the Listing Rules and is therefore conditional upon the approval of Inchcape Shareholders. It is also subject to merger control clearances in Chile and Peru and a merger control filing in Colombia. Completion is expected to occur in late 2022 or early 2023.

Client Relationship Partner Roddy Martin is leading the transaction with associates Harriet Forrest and Meera Thakrar. They are supported by Takanori Ueshima, Sara Lee and Isabel Picton-Turbervill. Aurell Taussig, Casey Dalton, James Tryfonos and Julian Nino are advising on the tax aspects of the transaction. Kristen Roberts, Stacey Pang and Pritika Advani are advising on financing. Veronica Roberts and Tom Kemp are providing anti-trust advice.

Roddy Martin commented: "We are delighted to be supporting Inchcape and Group General Counsel, Mike Bowers, on this transformational, cross-border, deal. Inchcape are determined to drive sector consolidation as part of their Accelerate strategy and we are pleased to continue to assist them in executing on their M&A ambitions globally."

The firm also recently advised Inchcape on its entry into the Caribbean market and its exit from Russia.

Claro, Brigard Urrutia, PPO and Rodrigo Elias advised Inchcape on local laws. The family sellers are advised by Barros & Errázuriz, Garrigues and White & Case.

Key contacts

Roddy Martin photo

Roddy Martin

Partner, Global Head of Automotive, Co-Head of India Practice, London

Roddy Martin

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Lydia Lam

Head of Communications, UK, US & EMEA