Suitors circle as rumours of a Kwik-Fit sale emerge

KWIK-FIT, the tyre fitting and car repair business founded by Sir Tom Farmer, is understood to have been put up for sale by its current owner, PAI Partners.

• Kwik-Fit is understood to be up for sale

The French private equity house hung a "for sale" sign on Kwik-Fit's insurance arm in February, but an auction of the entire business is now believed to be under consideration.

PAI bought Kwik-Fit for 800 million in 2005 from rival private equity group CVC. It has been in private equity hands since 2002, having previously been owned by car giant Ford, which acquired the chain from Farmer in 1999.

According to reports, the car repair firm has once again caught the attention of the private equity sector, with groups including Blackstone, Permira and KKR said to be considering a bid. Japanese tyre manufacturer Bridgestone, which owns the European garage business Truck Point, is also thought to be another potential contender.

A spokesman for Kwik-Fit refused to comment on a potential sale of the entire business, but confirmed that the insurance arm, which Farmer started in 1995, remains on the market.

A source close to PAI hinted that it is unlikely to rush into a sale of the whole business. The source said: "No approaches have been made or anything like that. It's certainly not something that is near-term in terms of being on the agenda."

The City expects Kwik-Fit's insurance arm to fetch close to 200m, while estimates for the main business come in about 250m, taking into account its debt of about 780m.

Despite the debt pile, the firm is thought to be attractive to buyers due to its success over the recession, when drivers spent money repairing existing vehicles rather than trading them in for new models.

There are expectations in the City that sales at the main business, which encompasses some 600 car repair centres in Britain and 500 in Europe, could surge 10 per cent this year to exceed 1 billion.

Meanwhile, operating profit is tipped to hit 150m. The firm recently hinted that it was trading well and is about 17 per cent ahead of profit targets.

The insurance operation, which employs about 1,000 people in Uddingston, is also thought to have continued its assault on the market. According to the last available annual figures for the insurance business, filed at Companies House last year, revenues were up 10 per cent in the 12 months to 31 December 2008 to 64.2m. Pre-tax profits during the period fell 5 per cent, but the company blamed the decline in the bottom line figure on strong comparatives.

Kwik-Fit's financial services arm has more than one million motor, home, pet and travel insurance policies. Farmer founded the Kwik-Fit chain in 1971 and set up the financial services division more than two decades later. He sold it for more than 1 billion to Ford.

The US car manufacturer took a heavy hit on the business when it was acquired by CVC in 2002 for about 330m. Ford said at the time that it wanted to dispose of the operation in order to concentrate on its core business.