TOKYO (Reuters) - Japanese trading house Itochu Corp (8001.T) said it has reached a basic agreement to buy top tyre seller Kwik Fit PAIPRK.UL from European fund PAI partners for 637 million pounds.
The deal underscores a push by Itochu to focus on businesses more directly linked to consumers as a way to hedge against volatility in resource markets, its traditional stronghold.
A favourable exchange rate between the yen and the pound helped close the deal, an Itochu executive told reporters on Thursday.
“We were always interested in Kwik Fit’s business but we were unable to buy it when the pound traded around the 200 yen level,” Managing Executive Officer Satoshi Kikuchi said.
“But with the pound trading at around the 130 yen level these days, the deal became even more attractive. That is one of the reasons why we decided to buy them now” he said.
Itochu acquired Stapleton’s Tyre Services Ltd, which says on its website that it has over 100 retail centres, in 1994. The Kwik Fit acquisition will give it an additional 1,218 automotive service centres in Europe. Itochu is also considering integrating Stapleton’s retail business with that of Kwik Fit, Kikuchi said.
Kwik Fit, which became a household name in Britain in the 1980s with popular TV commercials featuring dancing fitters, saw sales rise 6.2 percent to 485.5 million pounds in the first half of last year.
Earnings before interest, tax, depreciation and amortisation (EBITDA) rose 9.4 percent to 51.3 million pounds.
Itochu's shares closed the morning session up 1 percent at 848 yen, outperforming the benchmark Nikkei average .N225, which advanced 0.5 percent.
Reporting by Mariko Katsumura and Isabel Reynolds; Editing by Edwina Gibbs and Michael Watson