Genuine Parts Company has bought a 30 percent stake in an Australian business that it sees as a jumping-off point for expansion.
The $150 million investment in automotive aftermarket parts supplier Exego will give the Atlanta company time to understand the business in Australia and New Zealand before deciding if it wants to expand there, said Sid Jones, Genuine Parts' vice president of investor relations.
Genuine Parts will have the option to acquire Exego's remaining shares if the company meets certain earnings thresholds.
"We wouldn't do this if we didn't intend to go all the way," Jones said.
He said the growth opportunities in Australia and New Zealand are similar as in the United States, but that the location could provide a foothold for expansion into Asia.
The 89-year-old Exego has more than 430 locations in Australia and New Zealand and annual revenues of about $1 billion.
Jones said Genuine Parts had some operations in Europe in the 1970s, but that they were not generating the revenues the company had hoped. Those businesses were sold after four or five years.
The Exego investment gives Genuine Parts a well-established partner with leading market share, Jones said, as it enters a new market.
