Metair acquires beleaguered AutoZone

This follows JSE-listed Metair Investments Ltd, a leading international manufacturer, distributor and retailer of automotive components and energy storage solutions, entering into a sale of shares and facility agreement to acquire the entire issued share capital of AutoZone Holdings Proprietary Limited.

Metair CEO Paul O’Flaherty says the acquisition of AutoZone presents a unique opportunity to expand and diversify Metair’s exposure to the aftermarket parts supply chain on the African continent.

“AutoZone is a well-known player in the Southern African automotive aftermarket with an established distribution channel through which to complement and extend Metair Group’s reach,” he says.

The transaction does not require shareholder approval but is subject to the South African competition authorities approving the transaction, Metair’s lenders consenting to the transaction, and counterparties to certain AutoZone contracts consenting to the transaction.

AutoZone is a privately owned leading distributor of automotive parts, spares and car accessories in South Africa and has about 169 retail stores and seven QSV-branded stores.

Metair says a key driver of the historical trading performance of AutoZone has been the impact of the significant funding on the balance sheet predominantly related to the leveraged buyout of the business, which impacted its ability to invest in working capital sustainably and ultimately impacted its historical profitability.

The group says the total funding will be settled following implementation of the business rescue plan.

In terms of the transaction, Metair or its nominated subsidiary will pay a maximum consideration of R290 million in cash on the closing date, which will be used to settle AutoZone’s creditor and lender claims in line with AutoZone’s business rescue plan; acquire the sale shares for a nominal amount; and fund R75 million in working capital requirements.

O’Flaherty says Metair looks forward to concluding this transaction as it aligns with the group’s strategy of diversification in the mobility sector and will be a driver of value enhancing growth in line with the group’s return criteria.

AutoZone’s normalised management accounts reflect that as of 1 July 2024, the group had net assets, excluding liabilities that are subject to the business rescue plan, of R485 million, including net working capital of R421 million, as of 1 July 2024.

O’Flaherty says two of the opportunities for Metair from the transaction are to expand the automotive aftermarket parts it manufactures and supply them to AutoZone stores and to take a similar AutoZone model into sub–Saharan Africa, where there is significant demand for aftermarket parts.