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Rhiag-Inter Auto Parts Italia S.p.A. To Be Sold To LKQ Corp.

The business was acquired with funds from private equity investment group Apax Partners. Rhiag operates through 247 distribution centers and 10 warehouses, and serves more than 100,000 professional clients.

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LKQ-LogoThe funds advised by Apax Partners announced that LKQ Corp. has signed a definitive agreement to acquire the holding company of 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, for an enterprise value of €1.04 billion (approximately $1.13 billion). Rhiag has operations in Italy, Czech Republic, Switzerland, Hungary, Romania, Ukraine, Bulgaria, Slovakia, Poland and Spain. Rhiag operates through 247 distribution centers and 10 warehouses, and serves more than 100,000 professional clients.

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The transaction is expected to be complete early in the second quarter of 2016 and is subject to customary closing conditions and necessary regulatory approvals.

“Rhiag expands our addressable market with the addition of 10 new countries to our European footprint,” said Robert Wagman, president and CEO of LKQ Corp. “Rhiag has a strong market position in Italy and the Czech Republic and experienced management teams in their respective markets. Clearly this acquisition will accelerate our strategy of creating a Pan-European aftermarket mechanical parts distribution business in this highly-fragmented €188 billion (approximately $203.68 billion) wholesale DIFM market.”

Luca Zacchetti, Rhiag Group CEO, commented, “I believe 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, 2015 was approximately €882 million (approximately $955.34 million), and LKQ expects the transaction to be accretive to its earnings in 2016. These projected results exclude restructuring and acquisition related expenses.

The company intends to initially finance the acquisition with borrowings on its revolving credit facility and the assumption of Rhiag’s indebtedness. As of Sept. 30, 2015, the company had approximately $1.3 billion of available borrowing capacity on its credit facility.

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Sukhpal Singh Ahluwalia, LKQ Corp. 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.”

“Rhiag is an example of a high-quality, market-leading distributor,” said Frank Ehmer of Apax Partners LLP.  “I would like to thank Luca Zacchetti and the management team for delivering outstanding results across the business during our stewardship of the firm. The team achieved success on a number of organic growth initiatives as well as successfully executed on an M&A strategy. We believe the company is well-positioned to achieve success under LKQ ownership.”

BofA Merrill Lynch acted as exclusive financial advisor to LKQ Corp. in connection with this transaction. JP Morgan and UBS acted as financial advisers to Apax Partners and Rhiag Group.

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