The sale means CVC has acquired what is probably the best known aftermarket brand in Europe, a vast retail chain across the UK, a rapidly-growing network in mainland Europe, a strong fleet and retail business, and an improving presence in other areas like insurance.
It already owns the £470m turnover Dutton-Forshaw dealer group and recently acquired Halfords, the car accessory and bicycle chain.
On paper, the transaction price of Kwik-Fit would seem to suggest that the property market had slumped between 1999 and 2002. But prices for motor trade premises have risen steeply, suggesting that Ford should have sold Kwik-Fit for a profit.
“It seems as if Ford has completely lost its way,” says motor trade property expert David Edwards, of Husseys. “Although the motor trade is currently doing very well, the major problem is a lack of good sites for development and growth. Property prices have risen sharply over the past few years. There has been a substantial mark-up in the value for these types of properties.”
Bob Hood, head of the independent garage arm of the Retail Motor Industry Federation, is “amazed” at the figures involved. “These are the sort of sites that will be in demand over the years. After the changes to block exemption, lots of independent garages and chains will be looking to upgrade to new premises,” he says. “The whole Kwik-Fit sale could be very well timed for CVC. It looks like a golden opportunity.”
Martin Evans, of property outfit Martin Evans Associates, adds: “If you were to go to another tyre chain like ATS, they would say it is very difficult finding good properties - the right-sized properties on a main road in the right location. There is no doubt CVC has been opportunistic picking up this business with a huge discount, but I think Ford had trouble finding buyers who could take on the whole company.”
The deal is set to go through in the final quarter of 2002. Ford is writing off £500m in the third quarter related to the sale, but is keeping a 19 per cent stake in the business. Ex-Lex boss Trevor Chinn has been appointed chairman of Kwik-Fit, and Tim Parker becomes chief executive. Parker, previously chief executive at shoe company Clarks, takes an equity stake in the business.
CVC declined to comment on the price of Kwik-Fit or its plans for the company. A spokeswoman said it wanted the deal to be finalised before making any major plans public. That is likely to happen towards the end of the year.
The sale does not appear to have stopped Kwik-Fit's expansion into Europe. Last week it issued a press release saying it is growing rapidly in countries like Spain, where the fast-fit market was immature.
Founder Farmer's only a phone call away
Kwik-Fit founder Sir Tom Farmer has indicated he would be willing to retain a role at the Leith, Scotland-based fast-fit company, but says he has not discussed the matter with CVC.
“If someone wants to call upon my experience, then I am only too pleased to help,” he told the Financial Times.
Farmer declined to comment on the sharp fall in Kwik-Fit's value since Ford bought the group, saying only that “markets change”. However, privately he is said to believe Ford allowed itself to be short-changed over the deal.
He also rubbished speculation that the car giant is poised to take legal action over alleged accounting irregularities, uncovered by the FT, which are said to have deflated the price of the vehicle repair business.
Told of rumours circulating on the West Coast of America that Ford had still not ruled out legal action against him, Farmer doubted its validity. “I have heard absolutely nothing about that,” he says. “The West Coast is a long way from both Leith and reality.”
Farmer, who still owns many of the properties where Kwik-Fit's depots are based, has been steadily growing his portfolio of property investments including Morston Assets - co-owned by Farmer and Norwich businessman Tom Harrison.
Morton Assets is understood to be planning a £150m residential and commercial development on a former brickfields site at Linlithgow, near Edinburgh. It has submitted an application to build up to 1000 new homes and to re-open a disused rail link and station.
Farmer says he has no plans to retire.