AFTER a four-month freeze, the green light has shone on the contentious sale of major parts groups Covs to Repco parent GPC Asia Pacific after the Australian Competition and Consumer Commission (ACCC) approved a conditional agreement.

It paves the way for Covs Parts owner Automotive Holdings Group (AHG) Ltd to sell the WA-based Covs business to Repco. But the ACCC, which in October last year foiled the planned sale, has imposed conditions.

The ACCC will not allow a full sale of the 25 stores, withholding four Covs outlets because the sale would create a monopoly.

Covs has 16 Perth metropolitan stores and nine in the country. The four stores withheld from the sale are in regional centres.

ACCC chairman Rod Sims said the “revised transaction” – instigated by AHG and Repco – will exclude the regional towns of Karratha, Port Hedland, Esperance and Albany from the transaction.

That will allow these towns to continue to have two competing auto parts suppliers which Mr Sims said would provide “more choice for regional trade businesses”.

AHG managing director Bronte Howson said the hold-up of the Covs sale and reduced activity in the mining and resources areas where Covs operates had impacted on the listed company’s half-year financial result, released last Friday.

Covs is part of AHG’s “Other Logistics” division that includes AMCAP. This division had revenue to the half-year ending December 31, 2015, of $180.9 million, down from the $195.6m posted in the same period in 2014.

GPC distributes automotive parts through Repco and Ashdown-Ingram stores. Covs Parts operates 25 automotive parts stores in Western Australia.

This unlocks the December 17 halt on the proposed sale that was caused by the ACCC’s concern that it would “likely substantially lessen competition in several regional locations”. AHG will continue operate the four stores excluded from the transaction through its AMCAP parts division.

In a statement, the ACCC said AHG also offered an undertaking to maintain and operate the retained stores “in substantially the same manner as they are now operated”.

“This includes retaining current staff and ensuring similar levels of stock are maintained for a period of two years,” the ACCC said.

“Taking into account the undertaking, the ACCC is satisfied that excluding the retained stores from the proposed acquisition sufficiently addresses our concerns.”

AHG has owned the 80-year-old Covs business since July 2011. The business, which has 25 branches in WA, is the automotive arm of Coventry Group Ltd.

After AHG’s purchase of Coventry’s automotive parts business, the name was changed to Covs Parts and Coventry continues as a supplier of industrial fasteners and fluid hydraulics.

GPC Asia Pacific, which is a subsidiary of US-based Genuine Parts Company, bought Repco Australia, Repco New Zealand, car electrical and thermal products importer Ashdown-Ingram, motorcycle apparel retailer McLeod Accessories and specialist importer Motospecs in March 2013 for (then) $800 million.

GPC Asia Pacific owns 36 Repco stores and eight Ashdown-Ingram branches. Its offer to AHG (made in October 2015) for the Covs Parts stores included 16 locations in the Perth metropolitan area and in the towns of Albany, Bunbury, Busselton, Esperance, Geraldton, Kalgoorlie, Karratha, Mandurah and Port Hedland.

By Neil Dowling