(Reuters) -- U.S. aftermarket supplier LKQ Corp. said today it would buy Italy's Rhiag-Inter Auto Parts Italia SpA, owned by private equity firm Apax Partners LLP, to expand in the European auto spare parts market.
The deal, valued at 1.04 billion euros ($1.14 billion) on an enterprise basis, will give LKQ access to Italy, Czech Republic, Switzerland, Hungary, Romania, Ukraine, Bulgaria, Slovakia, Poland and Spain.
It will help the company tap a "highly-fragmented 188 billion euro wholesale DIFM (Do-It-For-Me) market," CEO Robert Wagman said. Europe accounted for more than a quarter of LKQ's revenue in 2014.
Merger and acquisition activity in the aftermarket auto parts industry is picking up as consumers choose to repair their vehicles instead of buying new ones.
Japanese tire maker Bridgestone Corp and billionaire investor Carl Icahn are locked in a battle for U.S. auto parts retailer Pep Boys-Manny, Moe & Jack.
Advance Auto Parts Inc is also reportedly exploring a sale after being approached by at least one possible suitor.
Rhiag, whose rivals include Mekonomen AB in the Nordic region and Inter Cars SA in Poland, had revenue of about 882 million euros in the year ended Sept. 30.
Reuters reported exclusively in July that Apax, which bought Rhiag in 2013 for an undisclosed amount, was exploring a listing or sale of the Italian company.
The LKQ-Rhiag deal is expected to be completed in the second quarter of 2016.
LKQ said it planned to finance the deal, which would add to its earnings from 2016, through its revolving credit facility and it would also take on Rhiag's debt.
LKQ sells used, recycled and remanufactured vehicle parts, including engines and transmissions. Last year the company operated more than 570 facilities, recording $6.74 billion in revenue and net income of $381.5 million. The combination with Rhiag would boost revenue to $8 billion.
The Chicago-based company was formed in 1998 and has grown globally through more than 200 acquisitions since then, according to its website.
During the first nine months, LKQ said it posted net income of $328 million on revenue of $5.4 billion, up from net income of $301 million on revenue of just over $5 billion during the same period last year.
Shares in LKQ rose 5 percent to close at $28.84 today.
BofA Merrill Lynch was LKQ's financial adviser for the deal and JP Morgan and UBS advised Apax and Rhiag.
Crain's Chicago Business and Automotive News contributed to this report.
