November 20, 2018

Continental To Buy Australian Kmart Tyre and Auto

Continental is to buy Kmart Tyre & Auto
Continental is to buy Kmart Tyre & Auto

Continental is to acquire Kmart Tyre and Auto Service (KTAS) from the Wesfarmers Group.

The international automotive supplier, tyre manufacturer and technology company says the acquisition will greatly reinforce the corporation’s tyre dealership network in Australia. The deal is worth $AU350 million.

“Australia is a highly promising sales market for Continental,” said Nikolai Setzer, member of the Executive Board of Continental AG responsible for the Tyre division. “The acquisition of KTAS marks a major expansion in our presence on the Australian tyre market. This move is part of our ‘Vision 2025’ growth strategy through which we are systematically expanding the worldwide presence of our Tyre division.”

The Sydney-based KTAS has 258 branches, more than 1,200 employees and its core business comprises passenger and light commercial vehicle tyre sales and service, inspections and maintenance, as well as minor mechanical repairs to brakes, air-conditioning and suspension systems.

“We are very pleased to further strengthen our commitment to the Australian market through the acquisition of KTAS – a very successful and well-known tyre and auto services chain in Australia,” added Ferdinand Hoyos, Continental’s Head of Passenger and Light Truck Tyre Business Asia Pacific. “Together with the current management team and our new colleagues at KTAS we are looking to drive forward what is already a strong network of outlets and expand their product portfolio.”

Continental’s Tyre division is one of the world’s leading tyre manufacturers. The corporation operates four tyre production plants in the Asia-Pacific region. To date, Continental has been represented in Australia through its Best Drive and Continental branded retail network.

The acquisition comes after speculation that Bapcor (parent of Burson Auto Parts) and Repco were in the running to buy KTAS, and follows reports earlier in the year that Wesfarmers was looking to offload the division.

In a statement, Wesfarmers said it estimates that it will report a pre-tax profit on the sale of approximately $270 million to $275 million, subject to completion adjustments. The sale is subject to certain consents and approvals including from the Australian Competition and Consumer Commission and the Foreign Investment Review Board.

It further added that Continental will use the KTAS name and logo for a transitional period following the sale.

Wesfarmers Managing Director Rob Scott said the agreement to sell KTAS crystallises value for shareholders from the business turnaround since it was acquired as part of the Coles Group in 2007.

“We believe that the divestment is in the best interests of Wesfarmers’ shareholders, while giving the employees and customers of KTAS the opportunity to join a highly complementary business in Continental. Continental’s automotive industry expertise will further strengthen the business’ customer offering,” said Mr Scott.

“I thank all of the KTAS team for their outstanding efforts in growing and improving the business under Wesfarmers’ ownership and, in advance, for their continued focus and commitment during the transition to new ownership.”