Japanese trading firm buys UK tire retailer Kwik-Fit
TOKYO – Japanese trading company Itochu Corp., agreed to buy the U.K.'s Kwik-Fit Group Ltd. from France's PAI Partners for 637 million pounds ($1.04 billion), adding to its auto-tire business as car sales grow in Europe. Itochu trades energy and metals and is involved in food, textiles and aerospace.
Itochu said it aims to complete the Kwik Fit deal by April as long as European anti-monopoly authorities and employees at Kwik Fit's operation in France agree to the takeover. Nomura Holdings is acting as financial adviser to Itochu in the transaction.
Itochu acquired British firm Stapleton's Tyre Services Ltd., which says on its website that it has over 100 retail centers, in 1994. The Kwik Fit acquisition will give it an additional 1,218 service centers in Europe. Itochu is also considering integrating Stapleton's retail business with that of Kwik Fit, Satoshi Kikuchi, managing executive officer of Itochu, said at a news conference in Tokyo.
Kwik-Fit had sales of 875 million pounds last year and is the market leader in tire retailing in the U.K. and Holland, Itochu said in a statement announcing the acquisition.
"In Britain, car sales are growing at annual pace of 2 percent and we expect stable operations there," Kikuchi, said Thursday. The yen's gain against the pound was also a factor in the purchase and Itochu aims to raise operating profit at Kwik-Fit to 13 billion yen ($159 million) a year in three years from 9 billion yen now, Kikuchi added.
The takeover of Kwik-Fit would be Osaka-based Itochu's largest in at least 10 years, according to Bloomberg data. Itochu said it was its third-biggest acquisition, coming as Prime Minister Naoto Kanis encouraging takeovers to give Japanese companies the heft to take on global rivals. On Feb. 4, Kanis's Democratic Party of Japan approved a proposal to simplify and speed up mergers and acquisitions.
Companies are resuming asset sales after the credit crisis brought deal-making to a near halt. PAI sold Kwik-Fit's insurance unit to Aegeas, the insurer formerly known as Fortis, for about 215 million pounds in July.
PAI, a Paris-based private equity firm, bought Kwik-Fit in 2005 for 800 million pounds from London-based CVC Capital Partners Ltd.
Formerly the private equity unit of French bank Paribas, PAI invests in companies valued at more than 500 million euros ($693 million). It owns stakes in United Biscuits, the maker of McVitie's products, and Yoplait, the French yogurt maker. Credit Suisse Group AG acted as financial adviser to PAI in the Kwik-Fit transaction.
Bloomberg and Reuters contributed to this report