LKQ Corporation has moved to quell fears that it will dominate the UK factor market, issuing a statement to clarify that it will sell GSF Car Parts following its completed acquisition of Uni-Select.
The initial announcement from LKQ Corporation only included a single line stating that “in connection with the Transaction, LKQ will undertake a process to divest GSF Car Parts U.K., Uni-Select’s U.K. based mechanical parts distribution business”.
It was left to GSF Car Parts themselves to include a proper statement to this effect, highlighting the strengths of the business, which will continue to operate independently until the acquisition is complete, when it will be divested from Uni-Select.
However, there appeared to be some initial confusion on social media following the announcement, with many commenting that LKQ Corporation would now hold a monopoly in the UK aftermarket factor industry.
GSF Car Parts to be sold
LKQ Corporation has therefore stated that it will not own GSF Car Parts, with the brand going its separate way from Uni-Select following completion of the purchase.
“The Transaction is subject to the receipt of anti-trust clearance in the UK – LKQ Corporation will offer to divest GSF as part of its application for the UK competition authority’s approval of the Transaction and the divestment,” the business said.
“In the interim, LKQ Corporation will not be involved in the day-to-day running of the GSF Car Parts business with the existing management team remaining in place and the organization ringfenced from LKQ.”
Nick Zarcone, President and Chief Executive Officer of LKQ Corporation, added: “As detailed in the presentation shared on our website upon announcing the acquisition last week, we expect to divest GSF following receipt of relevant regulatory approvals. We hope this announcement helps to reassure the UK aftermarket that we remain committed to competition in the sector.”
LKQ Corporation is well versed in what is needed to pass a deal through the Competitions and Markets Authority (CMA) in the UK. In 2016, its deal to purchase factor group Andrew Page was subjected to intense scrutiny.
In order to pass through the CMA, LKQ Corporation had to sell a number of Andrew Page stores to ensure it did not hold a monopoly in the market. Following a protracted investigation, in which the CMA stated that the purchase would seriously harm competition in some local areas, a total of nine Andrew Page branches were sold to Hilco Capital in 2018.
Meanwhile, the Andrew Page name disappeared in 2020 when LKQ-owned Euro Car Parts rebranded as LKQ Euro Car Parts, providing the same name across all stores. As a result of this exercise, 27 former Andrew Page stores closed.
LKQ Corporation is unlikely to want to go through this process again, especially as any purchase of GSF Car Parts will come under more scrutiny due to the size of both brands in the UK. The purchase of Uni-Select is not about increasing the number of factors the company has under its name, but the other areas the business holds, including its refinish, industrial coatings and related products in the USA and Canada.
It remains to be seen how the divestment of GSF Car Parts will take place. The company could simply be spun out into its own standalone business, or it could be sold, potentially to an investment portfolio to ensure a clear path through CMA channels. The purchase of Uni-Select will close towards the end of this year.