CVC has agreed to buy the Kwik-Fit aftermarket chain from Ford. The private equity firm has made substantial purchases in the UK aftermarket: adding Kwik-Fit to Halfords gives it two of the strongest brand names in vehicles repair and spare parts.
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The purchase of Kwik-Fit seems incredibly good value, and Ford has paid the price. CVC Capital Partners, the European private-equity firm, has made its second vehicle aftermarket acquisition within a month by purchasing the Kwik-Fit fast fit chain from Ford Motor Company, the world’s second largest carmaker. In July, CVC acquired car parts and accessories retailer Halfords from The Boots Company, making it the market leader in both sectors.
The sale of Halfords for £427 million gives CVC nationwide coverage in the car parts market, with around 400 sites, 9,800 employees and an annual turnover of £529 million. The chain has in recent years focused heavily on bicycles, and parent company Boots had recently spun-off the adjoining service centres to Centrica, owner of the Automobile Association.
It is the sale of Kwik-Fit which has caused the greater stir. Ford, under Jac Nasser, acquired Kwik-Fit from Sir Tom Farmer for £1 billion only three years ago, and has now sold it to CVC for just £330 million, whilst retaining a 19% that effectively values the company at £407 million. The purchase and subsequent sale cost Ford almost £540,000 per day of ownership. This follows Ford’s refocus on its core business of car making following Nasser’s departure.
While neither Kwik-Fit or Halfords is likely to experience massive growth in the coming years, both are well-established businesses which CVC hopes to make more efficient, providing the returns the current stock market conditions are likely to match.
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By GlobalDataRelated research: Datamonitor, ” Block Exemption: The impact on the aftermarket” (BFAU0028) You can download a FREE automotive report at www.dmfreereports.com/automotive.htm
