Automotive component and energy storage group Metair, which announced the sale of its battery business in Turkey only two weeks ago, said Friday it plans to acquire the motor part retail company AutoZone, which is in business rescue, for up to R290 million cash.
Metair said in a notice it had entered into a share and facility agreement with AutoZone’s business practitioners and the seller, TP Hentiq 6128 Proprietary. The market viewed the deal favourably, with Metair's share price ending 3.11% higher to R12.61 on Friday.
AutoZone was being restructured and Metair would acquire AutoZone’s shares from the seller, Main Street 1257 Proprietary and Absa Bank.
Metair would also advance AutoZone, a facility to settle creditor claims and fund working capital. The seller is beneficially owned by The James and Paula Family Trust, GPAM Proprietary, Ethos Fund VI, Ethos Mid-Market Fund I, and Emerald Panther Investments.
Absa, as the preferential creditor in terms of the business rescue plan, holds over 75% of the votes in a creditors meeting.
AutoZone, which entered into business rescue on July 1, 2024, operates 169 auto-retail stores and 7 QSV stores. Its net assets at that date was about R485m, including working capital of R421m. The company also managed to generate positive earnings before interest, tax, depreciation and amortisation in the previous financial year, of R61m.
AutoZone was formed in 1999 and acquired from Super Group by a consortium in 2010 for R435m. Private equity group Ethos Capital invested in the company in 2014, with the debt for the deal provided by Barclays Africa, which later reverted to Absa.
Metair said all of Autozone’s debt would be settled with the implementation of the business rescue plan. A key driver to the company's historical performance was the impact of significant debt, following a leveraged buyout of the business in 2014.
This funding structure had impacted AutoZone’s ability to invest in working capital sustainably, ultimately impacting historical profitability.
“Metair is of the view that following the restructuring of AutoZone…and investment in working capital, the business can return to profitability,” a statement said.
It said the acquisition was in line with Metair's diversification strategy in the mobility sector and would provide the group with a distribution channel to grow Metair's current automotive aftermarket businesses in South Africa.
Of the acquisition price, R200m would be paid to Absa to settle the bank's secured claim, R15m to settle pre-commencement unsecured creditors and R75m to fund the working capital requirements of AutoZone and provide it with the ability to trade as normal.
The intention was for AutoZone to exit business rescue as soon as possible after the closing date of the Metair transaction.
Meanwhile, two weeks ago Metair said last week it had decided to sell its Turkey battery subsidiary Mutlu Akü to Quexco Incorporated, for $110 million (R1.89 billion) as part of efforts to de-risk the group and strengthen the balance sheet.
“After the Mutlu disposal, it is Metair’s intent to primarily be an automotive manufacturing business focused on South Africa with a strategic focus of being a key player in the sub-Saharan African mobility and energy sector, which has compelling macroeconomic tailwinds in the medium to long term. Diversification of the business in these sectors will be key,” the group said at the time.
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