CHICAGO — LKQ Corp. on Oct. 1 acquired Euro Car Parts, the largest distributor of automotive aftermarket parts in the United Kingdom.
Established in 1978, Euro Car Parts has more than 3,500 employees serving more than 120,000 commercial customers from 89 locations throughout the U.K., offering a broad product line of 114,000 SKUs.
"The acquisition of Euro Car Parts represents an important strategic step for LKQ. It has always been our goal to acquire the best companies in their respective markets. Euro Car Parts represents that type of company in the U.K. with its impressive track record of growth, excellent distribution network and strong management team. Euro Car Parts provides an ideal entry point to Europe for LKQ. With this acquisition, we will work with Euro Car Parts customers and suppliers to expand the use of alternative automotive parts in the U.K.," said Robert Wagman, president and co-CEO of LKQ Corp.
Sukhpal Singh Ahluwalia, chairman and managing director of Euro Car Parts, commented, "Euro Car Parts is proud to be part of LKQ and we are excited to continue our successful growth with the LKQ team. Under my continuing leadership, this new partnership with LKQ will help the experienced Euro Car Parts management team to continue our rapid expansion in the UK market, in existing products and markets sectors, and to explore additional opportunities throughout Europe."
The initial purchase price was $347 million. In addition, the purchase agreement provides that the purchase price could increase by up to $85 million if Euro Car Parts meets certain growth targets in 2012 and 2013. The payments related to the growth targets would be payable in 2013 and 2014.
The company indicated that the acquisition is expected to generate fourth quarter 2011 revenue of approximately $120 million to $125 million and to be accretive to diluted earnings per share by 15 cents to 18 cents in 2012. The company noted that this estimate is contingent upon a number of factors including, without limitation, exchange rates, final accounting adjustments for the acquisition and interest rates. The estimate excludes any gains or losses associated with restructuring expenses, transaction costs incurred in conjunction with the acquisition and adjustments related to the contingent purchase price.
LKQ also announced that the company amended and restated its credit facility, increasing the facility by $400 million to $1.4 billion. The new facility allows the company to draw an additional $200 million term loan prior to March 31, 2012, and increases the size of the revolving credit loan capacity by $200 million to $950 million. The pricing and financial covenants of the March 25, 2011, credit facility remain substantially unchanged. The acquisition of Euro Car Parts was primarily financed by drawing on the amended credit facility.
