National auto parts company Auto One up for sale with keen interest tipped from PE, Bapcor

Auto One is up for sale, with the aftermarket parts outfit expected to drive keen interest from industry players looking to build scale.

Auto One and A1 Autoparts sell premium aftermarket parts. Pictured here is Chevrolet's Silverado.

Auto One, which also owns the A1 Autoparts group, is up for sale with Bapcor, Repco and private equity firms looking to further consolidate the sector tipped to be in the bidding for the aftermarket car parts operator.

The group, founded in 1988, now operates more than 80 stores nationally under the Auto One and A1 brands, with the latter launched in 2014.

Auto One, which is mostly owned by store owner shareholders, is understood to have turned over about $200 million last year, with a further 7.5 per cent growth forecast for the current financial year, and is billed as the nation’s third-largest automotive aftermarket parts distributor.

Auto One’s stores are both corporately-owned as well as franchise-owned, and it also supplies other independent automotive aftermarket outlets.

It also sells through its own websites, E-Bay and Amazon, with online sales growing rapidly.

According to the documents seen by The Australian, the company has been growing year on year store revenue at a compound 9 per cent per annum over the past four years, and has 115,000 members rewards customers nationwide.

Holden Special Vehicles are a favourite of car enthusiasts keen to add value and performance to their vehicles.

Private equity is tipped to be interested, however Super Retail Group, which owns Supercheap Auto, and fellow listed company Bapcor, which operates more than 1000 sites nationwide across brands including Autobarn and Burson Autoparts, are obvious potential suitors also.

Repco owner, New York Stock Exchange-listed Genuine Parts Company, would also be a natural acquirer.

When contacted for comment, Auto One managing director Mark Garwood told The Australian that the company had fielded interest from private equity and other potential buyers in recent times.

Mr Garwood said the company had managed to continue to grow throughout the pandemic, which was testament to its close relationship with customers.

“If I look at FY22, we had a lot of stores locked down for a big part of the year and we still recorded growth for the year, I am really proud of the resilient business we’ve built,’’ Mr Garwood said.

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“We have achieved some very strong growth in the market and have built two quality brands and have a unique opportunity going forward, for the right investor or buyer.

“We are really excited about the future, our own brand product range is expanding, our store network and sales base is growing and the number of new growth opportunities that have presented themselves in the last 12 months is really exciting.’’

A deal is likely to include about 40 current franchise and buying group-owned stores being bought out by the parent entity and coming under its management, up from nine company-owned stores currently.

In a recent note to clients, Citi Research suggested that parts retailers would benefit from increasing demand due to people driving more in the post-pandemic lockdown era, as well as new car supply issues leading to consumers hanging onto existing vehicles for longer.

Bapcor is Citi’s top pick in the small cap auto parts sector, with the broker forecasting first-half like for like sales growth of 3 per cent for Autobarn’s company-owned stores and 2 per cent for franchise stores in a generally weak consumer environment.

Citi says Bapcor will have FY22 net debt to earnings of 0.8 times and unused debt facilities of $232m.

“The relatively strong balance sheet positions the company well to ... pursue acquisition opportunities potentially within the specialist wholesale group,’’ Citi says, while noting Bapcor could also continue to invest in its own business or put excess funds towards dividends.

Bapcor itself was rumoured to be in the sights of takeover suitors in about March this year, when it hired Macquarie Capital as a defence adviser.

BGH Capital was rumoured to be looking at Bapcor at the time.

Auto One’s board includes Retail Oasis founder Stephen Kulmar and the former managing director of Supercheap Auto, David Ajala.

Its largest presence is in NSW with 45 stores (including the ACT), and it has 16 stores in Western Australia, with both states also having Auto One distribution centres.

The sale process is being run by boutique advisory firm Embiex.