Itochu's Kwik-Fit and Stapleton’s to be run as separate entities

3rd March 2011 | 0 Comments
 

Following the news that the Japanese conglomerate that own Stapleton’s Tyre Services has bought Kwik-Fit, Itochu has clarified that while the group is interested in “know-how” synergies between the businesses, they will continue to be run as completely separate entities.

In an official statement dated 3 March confirming the Kwik-Fit acquisition, Itochu Group representatives said: “Through this acquisition, Itochu will strive to enhance its tyre business by leveraging Kwik-Fit’s network and strong brand and STS’s strong logistics capability and its management know-how of retail operations to generate synergies among all tyre-related businesses of Itochu.” However Tyres & Accessories has been told that this does not include a merger programme.

An Itochu representative told T&A that the two businesses will “continue to run as entirely separate entities, maintaining respective autonomy. Both companies have excellent relationships with suppliers…existing policies and branding strategies will stay the same.” The reference to synergies in the acquisition statement is said to refer to “know-how and people skills” only.

Meanwhile the Wall Street Journal report more response to the Kwik-Fit deal and revealed another perspective on the acquisition. Quoting Yutaka Yoshii, general manager at Mito Securities, the paper said Itochu’s expansion of its global network is positive, as it has traditionally been strong in China.

“It will lead to stability in profit structure,” Yoshii said, citing the high dependence of trading houses on natural resources. But he said the outlook for trading house shares remains cloudy, since investors are focusing less on the merits of higher crude prices, and more on the possibility of a global economic slowdown from the crude price spike. The received wisdom is that the deal represents efforts by Itochu to focus on businesses more closely linked to consumers, in Reuters’ words, “to hedge against volatility in resource markets, its traditional stronghold.”

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