Lifeline thrown to South Africa’s biggest privately-owned car part shop

Metair, a JSE-listed manufacturer, distributor, and retailer of automotive components since 1961, will soon acquire the entire issued share capital of AutoZone.

AutoZone is the largest privately-owned car part retailer in the country with approximately 169 retail stores and seven QSV stores across South Africa, Namibia, Eswatini, and Botswana,

It further boasts a supporting supplier base of 688 companies and brands contributing to a catalogue of over 75,000 parts and accessories.

AutoZone entered voluntary business rescue on 1 July 2024 following a sustained period of financial hardships that started in 2014 and was exacerbated by the Covid-19 pandemic in 2020.

By June 2024 the company found itself “financially distressed” as defined in terms of Section 128(1)(f) of the Companies Act 71 of 2008, thus motivating the directors to place it into business rescue on their own accord and seek a buyer.

AutoZone CEO Dion De Graaff was confident it wouldn’t take too long to find a suitable candidate to take over the company as it boasts a strong brand presence in South Africa, a very loyal customer base, and valuable intellectual property on certain products.

Metair makes a move

Metair announced that on Thursday, 3 October 2024, it entered into a sale of shares and facility agreement with, inter alios, TP Hentiq 6128 Proprietary Limited and the appointed business rescue practitioners of AutoZone Holdings Proprietary Limited.

In terms of the agreement, Metair will acquire the entire issued share capital of AutoZone from its shareholders, and advance to AutoZone a facility to settle creditor claims and fund certain working capital requirements.

The value of AutoZone’s net assets as at 1 July 2024 – excluding liabilities that are subject to the Business Rescue Plan – amounted to approximately R485 million including net working capital of R421 million.

Furthermore, for the financial year up to 30 June 2024, AutoZone generated positive earnings before interest, taxation, depreciation, and amortisation of approximately R62 million and a net loss attributable thereto of approximately R61 million.

Following a review of these figures, Metair put an offer of R290 million on the table, split up as follows:

• R200 million – To settle outstanding debt to Absa
• R75 million – To fund AutoZone’s working capital requirements to allow it to continue trading as normal
• R15 million – To settle pre-commencement unsecured creditors

Discussing the rationale behind its decision to purchase AutoZone, Metair said the acquisition is in line with its strategy of diversification in the mobility sector and that the car part shop will provide it with an established distribution channel to grow its current automotive aftermarket businesses in South Africa.

“Metair is of the view that following the restructuring of AutoZone in terms of the Business Rescue Plan and investment in working capital, the business can return to profitability and be value accretive for Metair,” said the company.

Metair reserves the right to terminate the agreement should certain conditions not be met in due course, it said.