PAI Partners Confirms it is considering £650 million Sale of Kwik-Fit
Talk of Kwik-Fit’s potential sale is nothing new – reports on tyrepress.com date speculation about another impending change of ownership since September 2008. However an unnamed source within the private equity house has reportedly told news organisations including the Financial Times and Reuters that PAI Partners, the French firm that currently owns the fast fit business, has appointed Credit Suisse and Morgan Stanley to analyse the possible sale of the company. Unconfirmed speculation suggests the trigger for this move was the receipt of two bids. The Financial Times suggests Bridgestone and Michelin as two potential bidders; the former as a rival bidder to PAI in 2005, the latter as the owner of rival fast-fitter ATS Euromaster.
Readers of tyrepress.com will note that the sale figure of £650 million is a substantial improvement on the £250 million low price attached to the company in reports at the beginning of June 2010, while still being shy of the £800 million PAI paid for Kwik-Fit in 2005. While this was never confirmed as a realistic price tag, the apparent vastly increased value of Kwik-Fit reflects a steadily improving financial outlook.
Reuters says that the struggle of the financial crisis year that hit its nadir when PAI was forced to inject £20 million into Kwik-Fit to avoid breaching its covenants has appeased enough for sales and earnings before ITDA to increase 6.2 per cent to £485 million and 9.4 per cent to £51.3 million in the first half of 2010. In total, reports Reuters, Kwik-Fit had a net debt of six times its full-year earnings at £447.2 million at the end of June 2010.
The sale of Kwik-Fit Insurance for £215 million earlier in the year has also worked to tip the scales in PAI’s favour, especially if a sale is made for the estimated figure. There has been no official comment so far from any of the companies mentioned, so as yet the sale must remain in the “believe it when we see it” category. However, preparation of the field of play looks finally to be underway.