Automotive Holdings Group has won regulatory approval for the sale of its Covs Parts business after agreeing to retain four regional stores, and has also expanded its east coast operations through another acquisition in Melbourne.
The Australian Competition and Consumer Commission said today it woud approve the Covs Parts sale to GPC Asia Pacific, after the two companies agreed to modify the deal to exclude the auto parts stores in Karratha, Port Hedland, Esperance and Albany.
The revised deal is worth an estimated $36 million to $37 million including goodwill.
The approval came two months after the ACCC rejected the original sale, which was worth $43 million to $45 million.
GPC is a distributor and retailer of automotive parts and accessories to trade and retail customers through its 36 Repco and eight Ashdown-Ingram chains in Western Australia, while Covs Parts supplies automotive parts and accessories mostly to trade customers out of 25 stores state-wide.
When the deal was announced, the ACCC made inquiries with trade customers, suppliers and dealerships in Perth and regional towns, and found Covs Parts and GPC’s businesses were the only two automotive parts suppliers in some regional areas.
The ACCC came to the conclusion in December that the deal would substantially lessen competition in those regional locations.
Under the modification to the transaction, AHG will sell 21 of its Covs parts stores in WA to GPC but will retain the four regional stores and will continue to operate them as they currently are for two years.
ACCC chairman Rod Sims said the revised transaction meant that the four regional towns would continue to have two generalist auto parts suppliers, providing more choice for regional trade businesses.
“Taking into account the undertaking, the ACCC is satisfied that excluding the retained stores from the proposed acquisition sufficiently addresses our concerns,” he said.
Meanwhile, AHG has bought Knox Mitsubishi in Melbourne for $5.4 million.
Managing director Bronte Howson said Knox was a well-run stand-alone dealership.
The purchase takes AHG's network to 178 franchises at 104 dealership locations in Australia and New Zealand.
AHG shares were 3 cents higher at $4.48 today.
