Wesfarmers Ltd (ASX: WES) has announced it has agreed to sell its Kmart Tyre and Auto Service (KTAS) business to Continental AG for $350 million.
Wesfarmers estimates it will report a pre-tax profit of approximately $270 million to $275 million on the successful completion of the transaction.
The sale, which is subject to approval from the Australian Competition and Consumer Commission and the Foreign Investment Review Board, is expected to be complete in first-quarter 2019.
KTAS is one of Australia’s largest tyre, automotive and service repair companies, with 258 stores across the country and over 1200 employees.
Germany-based Continental AG currently employs more than 243,000 people in 60 countries and generated sales of €44 billion in 2017. Continental has said it will use the KTAS name and logo for a transitional period following the sale.
Wesfarmers Managing Director Rob Scott said the agreement to sell KTAS “crystallises value” for shareholders 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. Continental’s automotive industry expertise will further strengthen the business’ customer offering,” Mr Scott said.
The Wesfarmers share price closed 22 cents or 0.44% higher at $50.38 on Friday afternoon, up 23.3% from its $40.68 trading price this time last year.