LKQ buying Rhiag to boost Euro holdings

LONDON (Dec. 22, 2015) — Auto parts distributor LKQ Corp. has arranged to buy Rhiag-Inter Auto Parts Italia S.p.A., a pan-European business-to-business distributor of aftermarket spare parts for passenger cars and commercial vehicles, in a deal valued at $1.13 billion.

Pero, Italy-based Rhiag operates through 247 distribution centers and 10 warehouses in Italy, Czech Republic, Switzerland, Hungary, Romania, Ukraine, Bulgaria, Slovakia, Poland and Spain and serves more than 100,000 customers throughout Europe.

"Rhiag expands our addressable market with the addition of 10 new countries to our European footprint,” said LKQ President and CEO Robert Wagman. “Rhiag has a strong market position in Italy and the Czech Republic and experienced management teams in their respective markets.”

Mr. Wagman said the acquisition will accelerate LKQ's strategy of creating a Pan-European aftermarket mechanical parts distribution business in a “highly fragmented” do-it-for-me wholesale market valued at more than $200 billion.

The transaction is expected to be completed early in the second quarter of 2016 and is subject to customary closing conditions and necessary regulatory approvals. LKQ expects the transaction to be accretive to its earnings in 2016, excluding restructuring- and acquisition-related expenses.

Rhiag Group CEO Luca Zacchetti said that combined with LKQ, “Rhiag Group will be in an even stronger position to deliver its superior service level to customers across Europe.  I am committed to pursuing our existing strategic goal of profitable market share growth.”

Rhiag's revenue for the 12 months ended Sept. 30 was about $1 billion.

LKQ intends to finance the acquisition initially with borrowings on its revolving credit facility and the assumption of Rhiag's indebtedness, according to Apax Partners L.L.P., a London-based independent global partnership focused solely on long-term investment in growth companies, especially those in consumer, healthcare, services and tech/telcom sectors.

Apax has been an investor in Rhiag since 2013.

As of Sept. 30, LKQ had approximately $1.3 billion of available borrowing capacity on its credit facility.

Sukhpal Singh Ahluwalia, an LKQ board member and Euro Car Parts chairman, added: “I have long admired Rhiag's impressive track record of growth and strong distribution network. We have numerous common suppliers, and I have worked closely with many of them for more than 30 years.

“I am confident that together with Rhiag we will make our supplier relationships even stronger. LKQ and Rhiag share a commitment to serve our customers and a desire to expand into new markets. I look forward to welcoming the Rhiag team to the LKQ Europe family in a few months.”

Chicago-based LKQ is a provider of alternative and specialty parts to repair and accessorize automobiles and other vehicles, with operations in North America, the United Kingdom, the Netherlands, Belgium, France, Scandinavia, Australia and Taiwan. LKQ has a strong position in recycled parts.

LKQ reported earnings of $381.5 million on sales of $6.74 billion in fiscal 2014, including $1.85 billion in revenue generated in Europe.

The firm expanded its operations into Europe in 2011 with the acquisition of Euro Car Parts Holdings Ltd. in the United Kingdom, and broadened that in 2013 into continental Europe in 2013 by buying Sator Beheer B.V., a distributor of vehicle mechanical aftermarket products in the Benelux region.