LKQ Corporation, owners of LKQ Euro Car Parts, has completed its acquisition of Uni-Select, expanding its position in the aftermarket.
The deal sees two of the largest UK factor groups coming together, with GSF Car Parts owned by Uni-Select. However, LKQ Corporation intends to divest GSF, in order to ensure it gains approval from the Competition and Markets Authority (CMA).
The acquisition has been confirmed in Uni-Select’s domestic market of Canada. Under the terms of the Arrangement, the Purchaser has acquired all of the issued and outstanding shares of Uni-Select for C$48.00 per share in cash.
CMA investigates Uni-Select purchase
Prior to the announcement, the CMA had issued an ‘Initial Enforcement Order’ around the deal between LKQ Corporation and Uni-Select, stating that ‘arrangements are in progress or contemplation which, if carried out, will result in the two companies ceasing to be distinct and lead to a substantial lessening of competition in certain UK markets.’
LKQ Corporation offered undertakings in lieu of reference to the CMA, and the government body has indicated it has until 2nd October to decide whether to accept the proposals, or extend the deadline to 27th November, if there are reasons to do so. If these undertakings are not accepted, the CMA will take matters further.
In the meantime, the CMA has stated that for the UK, during the time between decisions, LKQ must not integrate GSF Car Parts into its business, or impair the ability of the factor to compete independently.
It is likely that LKQ Corporation will look to comply fully with the CMA investigation, following the drawn-out completion of its deal to purchase Andrew Page in 2016.
GSF Car Parts sale timeline
The CMA conditions suggest that following the completion of the Uni-Select deal, LKQ Corporation has until 2nd October to divest GSF Car Parts, or appeal for an extension to 27th November.
It is unclear how the divestment will play out. Either LKQ Corporation may look for a buyer for the GSF business, or it will spin the company out, leaving it to stand on its own in the marketplace. Neither company has stated the preferred divestment route at this time.
“GSF Car Parts will continue to operate with total independence from LKQ Corporation during the transitionary period between the completion of the arrangement and the divestment of GSF,” stated GSF Car Parts President and COO Sukhbir Kapoor.
“Our 180 branches remain open for business as usual and will continue to offer excellent service to trade and retail customers. We look forward to the pending completion of the divestment and beginning the next chapter in GSF’s journey as a leading motor factor in the UK.”