Bridgestone Closes in on Kwik-Fit Purchase

Bridgestone is taking the lead in the race to acquire Kwik-Fit. According to the Financial Times, the Japanese manufacturer has teamed up with Mitsubishi Corporation to bid for Kwik-Fit and has already seen off early interest from Michelin and Wal-Mart.

Bridgestone executives have been in London since last month working on their bid. “They are taking it very seriously,” said one person close to the auction. The Japanese group has a strong presence in the US through its Firestone unit, but has long been trying to crack the European market and looked at Kwik-Fit the last time it was on sale.

The battle continues however, with Bridgestone still facing competition from at least five private equity houses, including Kohlberg Kravis Roberts, which last year bought German automotive parts retailer, ATU in a deal worth 1.45 billion euros (£980 million). BC Partners and JPMorgan Partners, which owns IMO Car Wash, have also made bids, as have two teams comprising PAI and Goldman Sachs, and CSFB with Investcorp.

Tim Parker, the former Kwik-Fit chief executive who now runs the AA, owns 5 per cent, with another 3.5 per cent held by Sir Trevor Chinn, the chairman. CVC owns most of the remaining 72.5 per cent, but has not disclosed its precise holding. Fully-financed offers are due for Kwik-Fit in a fortnight.

Ford, which paid £1 billion for Kwik-Fit in 1999, sold it to private equity group CVC Capital a few years later for £350m, but kept a 19 per cent stake.

The business is being auctioned by Deutsche Bank, and potential bidders were told last month that Kwik-Fit was expected to generate sales of £810 million this year. Deutsche Bank is offering bidders a £570 million staple debt finance package, a 6.6 debt multiple on the group’s 2004 earnings before interest, tax, depreciation and amortisation of £85m, the FT reports.