New bidders enter into Unipart Automotive rescue talks

While there hasn’t yet been a clear outcome of the Unipart Automotive rescue talks, new bidders have entered into takeover discussions. Sources close to the talks have 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) has now entered the Unipart Automotive rescue talks.

One particularly significant part of this development is that R Capital, according to a Sunday Times report, is understood to be 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.

It is also worth pointing out that the entrance of R Capital into the fray, by no means suggests the prosposed rescue is a foregone conclusion. The Sunday Times described the chances of a rescue deal as “50-50”, while further online sources call the move a last ditch effort. Ultimately it seems that much of the success of talks rest in the hands of main lender Dutch bank ABN Amro, which will be looking to secure the deal it thinks is most likely to sufficiently repay its recently extended credit lines.

At the same time as Euro Car Parts and Better Capital appear to be taking steps to appear as less proactive parts of the talks (but by all accounts still in them), there have also been suggestions of another two unnamed bidders in the talks. At the start of proceedings there were three bidders – Euro Car Parts, Better Capital and one more, which was not named. Now Euro Car Parts and Better Capital are still said to be in the mix, but R Capital and two unnamed parties are there too. What is not clear is if there has been any kind of double counting here or if indeed there are as many as six bidders. Of course the higher the number of bidders the greater the chance that someone will buy, but of course this has not been confirmed and is no guarantee.

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.