Are Unipart Automotive rescue bids in?

Sources are reporting that the Unipart Automotive rescue bids have been received and we are likely to hear the outcome in the next 24 hours, but these claims could not be officially verified. Earlier in the week separate sources close to the negotiations told Tyres & Accessories they were expecting talks to conclude towards the end of the week, which would seem to fit into the same timeframe. With managers saying they were hopeful talks could be wrapped up in 36 hours at the beginning of the process on 8 July, the fact that almost 10 days have now passed suggests things are becoming increasingly urgent. It is also putting pressure on its loyal workforce. However, the official line from shareholders Unipart Group and H2 Equity as well as one of the three bidders Euro Car Parts has been a unified “no comment”.

With an annual turnover of roughly £170 million, Unipart Automotive is certainly not a small entity, but neither it is the largest business to move in automotive circles. So why is there so much interest in the ups and downs of this business? Of course the fact the company employs something like 1600 people focuses attention. And the fact that this occupies a significant portion of the market is import too.

To put this in perspective, the latest United Aftermarket Network data suggests three companies – Euro Car Parts, Andrew Page and Motor Parts Direct – collectively share around 27 per cent of the £2.5 billion segment. Therefore the average market share of this group is 9 per cent worth roughly £225 million. If any one of them was able to take over Unipart Automotive, even when taking integration and consolidation effects into consideration, the newly combined company would be able to pull away from the pack and become an undisputed market leader. This in turn speaks of the long-term strategic value of gaining a larger portion of the market and becoming dominant where you are strong.

However, there are also reasons why this move is directly relevant to the tyre market. Apart from anything else two of the company’s largest customers are KwikFit and National Tyres, giving the company access to 1000 branches up and down the country straight away.