Ford said the takeover was part of a drive to move from its image as a motor manufacturer and turn itself into the leading consumer services company in motoring.
Kwik-Fit shareholders will be offered 560p in cash for each share, a 32 per cent premium to their Friday closing price of 419p. Shares in Kwik-Fit soared, climbing 28 per cent to close at 541p. Other motor service retailers rose in sympathy, including Lex, up 38p at 469p.
The deal gives the car giant greater access to after-sales markets in Europe, with control of 1,900 garages in the UK, Belgium, France and Germany.
Ford executives said they would service competitor's cars for the first time, and offer enhanced service on its own cars over two years old.
Jacques Nasser, president of Ford, said: "Kwik-Fit is an outstanding company that has earned a leading position in the fast-fit market and created a successful customer formula - innovative high value services with convenient locations and knowledge of the customer."
While executives talked of "outstanding growth potential" and significant synergies, they said no job cuts were planned. Ford is retaining the services of Sir Tom Farmer, Kwik-Fit's founder, chairman and chief executive, who will remain in charge of the company he set up 28 years ago. He will also join the board of the Ford Consumer Services Division (FSCSD). Directors of Kwik-Fit are unanimously recommending the offer.
A Ford spokesman said the first talks began "several months ago" after Ford approached Kwik-Fit. "What we were looking for was the best aftermarket company in the world," he said. "This is not just about Europe but about the world. We concluded that Kwik-Fit was the best."
Analysts yesterday said they were surprised that Kwik-Fit had decided to talk to Ford, in spite of a mild profits warning late last year.
"It is a company that has always made great play of its independence and was doing quite well enough on its own," said one. "It was probably panicked into talking by the profits warning."
Joe Dickinson, an analyst with leading motor market consultants AT Kearney, said the deal underlined Ford's strategy of vertical integration, buying car dealers in the US and increasingly using its brand to move into retail services.
Ford said it intended to accelerate the Kwik-Fit European expansion, which involved buying the Speedy chain of motor services outlets last year.