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Partco gears up to buy Dana Distribution

Partco Group, the UK's largest independent distributor of car and lorry parts, has bought Dana Distribution Europe, which trades in the UK as Brown Brothers, one of the leading distributors of paint and finishing supplies to the UK bodyshop market. The purchase price is pounds 103m in cash, including the repayment of pounds 11m of net debt.

The deal is subject to shareholder approval next month and is being partly funded by a one-for-two rights issue of 24 million shares at 300p each to raise pounds 68.8m. The balance will come from cash and bank borrowings.

The deal will virtually double Partco's business, diversify its product range and help it match the trend to increasing consolidation in the UK bodyshop market. The combined group will have about 4 per cent of a UK market worth around pounds 2.4bn.

Partco had 348 branches and Brown Brothers 134 but in a business where speed of delivery is crucial their locations were largely complementary and widespread branch closures and redundancies were unlikely, a spokesman said yesterday.

The acquisition is expected to be roughly earnings-neutral in the current year before the effect of restructuring charges, and to enhance earnings per share materially in 1998.

The acquisition would give Partco market leadership in the sale and distribution of paint and finishing supplies where it currently had only a limited presence, Partco's chairman, Gordon Yardley, said yesterday. About 88 per cent of DDE's turnover is in the UK where it owns 134 branches. The business made an operating profit of pounds 10.9m last year on a turnover of pounds 186m.