- Wesfarmers is selling Kmart Tyre & Auto Service for $350 million.
- The deal is part of a series of divestments for Wesfarmers.
- The mechanic workshops business is being bought by German automotive manufacturer Continental AG.
Wesfarmers has sold Kmart Tyre & Auto Service (KTAS) to German automotive manufacturer Continental AG for $350 million.
The mechanic workshops business is the fourth biggest tyre retailer in Australia with 258 stores and 1,200 employees.
Wesfarmers estimates it will report a pre-tax profit on sale of between $270 million and $275 million.
The deal is part of a series of divestment for Wesfarmers, Australia’s largest private employer whose assets include supermarket chain Coles.
Last week the company announced the sale of its 40% interest in the Bengalla Hunter Valley coal mine to joint venture partner New Hope Corporation for $860 million. Wesfarmers expects to report a pre-tax profit on sale of $670 million to $680 million.
Wesfarmers is also spinning off its Coles supermarket division as a separate ASX-listed company.
Continental, which employs employs more than 243,000 people in 60 countries, will use the Kmart Tyre & Auto Service name and logo for a transitional period following the sale.
Wesfarmers Managing Director Rob Scott says the agreement crystallises value from the business turnaround since it was acquired as part of the Coles Group in 2007.
“We believe that the divestment is in the best interests of Wesfarmers’ shareholders, while giving the employees and customers of KTAS the opportunity to join a highly complementary business in Continental,” he says.
“Continental’s automotive industry expertise will further strengthen the business’ customer offering.
“I thank all of the KTAS team for their outstanding efforts in growing and improving the business under Wesfarmers’ ownership and, in advance, for their continued focus and commitment during the transition to new ownership.”
The deal, subject to certain approvals from the Australian Competition and Consumer Commission (ACCC) and the Foreign Investment Review Board, is expected to be complete in the first quarter of the 2019 financial year.
NOW WATCH: Money & Markets videos
Business Insider Emails & Alerts
Site highlights each day to your inbox.