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CVC lines up buyers for Kwik-Fit network

CVC is looking to sell Kwik-Fit after dropping plans for an initial public offering (IPO).

The fast-fit business, bought by CVC from Ford for £330m in August 2002, is reputed to be worth around £750m. Ford paid £1bn to founder Sir Tom Farmer for Kwik-Fit in 1999.

Speculation linking Kwik-Fit to a flotation or sale has been growing since the beginning of last year and CVC has now sent out documentation containing information about a potential sale to prospective buyers, although it declined to name them. Since the purchase CVC has closed several sites in an attempt to boost profitability.

Industry analysts believe that a sale is inevitable and is likely to fetch a higher price than if CVC had pursued an IPO. A deal could be completed by the end of the summer, with tyre manufacturers being the main contenders.

“CVC must be running out of patience with what to do with Kwik-Fit. I think the de-skilled approach of the company has had its day,” says Brian Taylor of automotive consultancy Trend Tracker.

“A flotation might reveal the true value of the brand but is it as strong as people think? If the brand was so valuable then you have to question why Sir Tom Farmer sold it. I doubt another investment firm will buy – instead we’re more likely to see the tyre firms like Bridgestone and possibly Continental vying for it.”

A fast fit chain is an attractive proposition for a tyre manufacturer – Michelin owns ATS Euromaster, for example – due to the volume opportunities for sales. Neither Bridgestone or Continental own tyre chains in the UK, although both do in other countries.

“If a tyre manufacturer doesn’t buy it then I tend to think it would be more use broken up and picked up by other fast-fit chains,” adds Taylor.

Edinburgh based Kwik-fit still has more than 2,300 outlets across Europe including Speedy in France and Pit Stop in Germany. In the UK it has 670 service centres and 200 mobile tyre-fitting vans.

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