THE battery and automotive components manufacturer, Metair, has signed an agreement to acquire AutoZone, a leading distributor of auto parts, spares and car accessories in South Africa, which has been in business rescue since 1 July 2024.
Metair said it is of the view that following the restructuring of AutoZone in terms of the business rescue plan and investment in working capital, the business can return to profitability and be value accretive for Metair.
The acquisition is in line with Metair’s strategy of diversification in the mobility sector and provides Metair with an established distribution channel to grow Metair’s current automotive aftermarket businesses in South Africa.
AutoZone is a privately owned company with approximately 169 retail stores and 7 QSV stores.
Metair will acquire the entire issued share capital of AutoZone from AutoZone’s shareholders. It will also advance to AutoZone a facility to be used by the company to settle creditor claims and fund certain working capital requirements, in accordance with the implementation of AutoZone’s approved business rescue plan.
AutoZone entered into business rescue proceedings on 1 July 2024 when the value of the net assets (excluding liabilities that are subject to the business rescue plan) was approximately R485 million (including net working capital of R421 million). For the financial year preceding business rescue proceedings up until 30 June 2024, AutoZone generated positive earnings before interest, taxation, depreciation and amortisation of approximately R62 million and a net loss attributable thereto of approximately R61 million.
Metair said it should be noted that a key driver of the historical trading performance of AutoZone has been the impact of the significant debt on the balance sheet predominantly related to the 2014 leveraged buyout of the business. This funding structure impacted AutoZone’s ability to invest in working capital sustainably, ultimately impacting historical profitability. All of AutoZone’s historical debt will be settled following implementation of the business rescue plan.
In terms of the agreement, the maximum amount payable by Metair (or its nominated subsidiary) is R290 million.
The successful acquisition of the company is subject to the South African competition authorities approving the transaction; Metair’s lenders consenting to the transaction; and counter-parties to certain AutoZone contracts consenting to the transactio
