Unipart Automotive is no more

Lengthy rescue talks fail and 1200+ jobs are lost

Andrew Page/Parts Alliance JV saves 33 branches

After two weeks of intensive rescue talks, on Thursday 25th July, Unipart Automotive announced that it and its private equity owners (H2 Equity Partners) had failed to find a buyer for the loss-making company and had therefore called in administrators KPMG. Before that news made it to press, the administrators sold a comparatively small part of the business to a newly formed joint venture made up of car parts/workshop equipment distributors Andrew Page and The Parts Alliance. The deal sees Andrew Page acquire 21 branches and The Parts Alliance a total of 12. A total of 361 staff employed across these sites have transferred to Andrew Page and The Parts Alliance with immediate effect. Andrew Page announced it had rejoined The Parts Alliance on 8 July, the same day the news broke that Unipart Automotive had put the administrators on alert and was seeking out a rescue plan.

Headquartered in Solihull, Unipart Automotive operated a network of 180 branches and distribution hubs trading under the Unipart Automotive, Partco Autoparts, and Express Factors brands. It had employed 1813 people. It was – as far as the aftermarket is concerned – something of a household name. Now it has folded. And not without costs. The remainder of the Unipart Automotive business has ceased to trade and a total of 1244 members of staff have been made redundant. A total of 208 members of staff have been retained to assist the administrators (see “What next for Unipart workers?” for more on this).

The company also directly supports over 700 independent, owner-operated garages through its Unipart Car Care Centre programme, in addition to having 19 franchisees. These companies fall outside of the administration and will continue to operate as normal.

Background clarity

Initially at least three bidders were associated with the deal and fast-growing rival Euro Car Parts could be seen as a front runner followed by equity firm Better Capital.

But first a little background. Following the initial news reports Unipart Automotive was close to calling in the administrators on 8 July, a day later minority shareholder Unipart Group clarified its relationship to Unipart Automotive:

“Unipart Group has released a statement regarding recent media activity referring to Unipart Automotive – the car parts and accessories company that it sold in 2011. Unipart Automotive, the branch network which was previously known as Partco, was sold by Unipart Group to a company controlled by H2 Equity Partners in 2011. Unipart Group retained an equity stake, but a condition of the sale was that Unipart Group exercised no control over the business.

“Unipart Automotive was granted a restricted licence to use the Unipart brand on a limited range of wholesale outlets and a tightly controlled range of automotive car parts. Recent press coverage has confused Unipart Automotive with Unipart Group. Some facts have been incorrect. For instance, Unipart Automotive was referred to as being part of British Leyland. This is incorrect; Partco was not part of British Leyland. It is important to note that Unipart Group and Unipart Automotive are different companies.

“Unipart Group continues to have a strong balance sheet and strong growth with a range of blue chip clients in its core business in manufacturing, logistics and consultancy sectors globally.”

The statement was clearly an effort to a) distance itself from Unipart Automotive b) reiterate that it is a silent partner in the running of the business and c) clarify that Unipart Group is in a wholly different financial position to Unipart Automotive. And all of this paints the picture of a minority shareholder that is willing to sell or at least doesn’t have any concrete reasons for not wishing to sell. At this point it is worth highlighting that Unipart Automotive may have considered itself to be hands-off when it comes to the running of Unipart Automotive, but – with a 47 odd per cent shareholding – it was pretty much the largest kind of minority shareholder it could possibly be.

Rescue talks

Then, roughly a week into talks, sources close to the negotiations confirmed to Tyres & Accessories that buyout firm R Capital, which is known for an earlier rescue of the Little Chef chain in 2007 (the café business was sold to Kuwaiti investors last year) had entered proceedings. Two other unnamed bidders joined in at the same time, who were very likely to have been the constituent parts of the joint venture that ended up rescuing part of the operation – Andrew Page and The Parts Alliance.

However, it is worth pointing out that at this stage R Capital, according to a Sunday Times report, was understood to have been interested in acquiring all of the Unipart chain rather than breaking it up. It is pure speculation at this stage, but it is worth asking the question of whether this is the reason why previous front-runner Euro Car Parts and the other apparently keen suitor Better Capital have now come some way off the gas in terms of negotiations. The opportunity to be more selective about what is purchased would certainly seem to appeal to a company such as Euro Car Parts, which has specific growth goals, but also wide existing market coverage. And in any case, administration is likely to result in the breaking up of the company anyway, providing little strategic benefit to adopting another position.

Contrary to much repeated figures, Unipart Automotive’s ownership is not as simple as it first seems. Rather than the company being 50.1 per cent owned by H2 Equity Partners directly and 49.9 per cent owned by Unipart Group, documents filed at Companies House show that the business is actually 100 per cent owned by holding firm Water Newco Holdings Limited, which in turn is owned by numerous shareholders and H2 Equity Partners – including a number of senior managers at Unipart Automotive. Unipart Group itself holds less than was previously reported, with 47.9 per cent of Water Newco. It is also worth pointing out that this shareholding has always been passive and therefore makes the company a silent partner in proceedings.

The final word

In any case the final words go to Andrew Page and the Parts Alliance, which between them were the only people to successfully buy anything.

At the time Jim Sumner, executive chairman of Andrew Page, said: “This development also now puts us well on the way to achieving our stated goal of building a truly national distributor with a network of over 150 branches – this acquisition will take us to 114.

“This highly complex deal has only been possible through the backing of a number of people – we would not have been able to do it without the support of John Neill, chairman and chief executive of the Unipart Group (which is a separate business from Unipart Automotive), and his team. They worked with us in a very constructive and collaborative way and we look forward to building a strong ongoing relationship with them. Also The Parts Alliance our investor partners Phoenix Equity Partners and in particular Endless LLP who have been key to enabling this transaction to be completed.”

Sumner added his regret at the situation many Unipart Automotive staff now find themselves in: “The Unipart Automotive situation is extremely sad as we know many of their team with whom we have long standing industry relationships. However, I would like to say on a personal level that it has been a privilege to be able to help contribute to saving a number of the jobs involved.”

John Neill, chairman and chief executive of The Unipart Group, added: “We are saddened by the Unipart Automotive situation but we know Andrew Page well and respect their near 100 year history in the automotive aftermarket. They have a strong reputation for selling high-quality products and brands and we’re pleased to have been able to support Jim Sumner’s plans to secure a future for the number of branches and former Unipart Automotive people. We look forward to working with Andrew Page to ensure the continued supply of high-quality Unipart branded products to Britain’s car owners and Unipart Car Care Centres.”

Indra Harrison, investment director at Endless LLP, commented: “We pulled together this rescue deal in less than five days from offer to completion, which is testament to the working relationship between Andrew Page, The Parts Alliance and Unipart Group. We are very excited about the future, working with our new partners and this transaction will accelerate Andrew Page’s sales well beyond £200 million.”

This latest development follows the refinancing of Andrew Page by Phoenix Equity Partners and Endless LLP early in 2014. Since then a refocusing of strategic direction and branding has seen the management team strengthened, trading improved significantly, the Camberley Auto Factors outlets – acquired in 2012 – rebranded as Andrew Page and also the strategic decision to join The Parts Alliance. The timing of the last point is particularly interesting and suggests the two parties were considering a bid from the day rescue talks began being held.

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