MONTREAL - Uni-Select Inc. will enter the European market after reaching a deal to buy the United Kingdom's second largest distributor of automotive repair parts for about C$355.3 million.

The Parts Alliance will become the continental base for the Quebec-based company, which distributes automotive paint and repair parts throughout Canada and auto paint in the United States.

The deal announced Thursday comes about two years after it sold its U.S. automotive parts distribution business to an affiliate of Icahn Enterprises for US$340-million.

Uni-Select CEO Henry Buckley said the company has been aggressively looking over the last two years for a third pillar of growth beyond North America.

"The transaction announced today opens a new avenue for growth for our company in a vast new geographic market," he said during a conference call.

Britain is Europe's fourth-largest automotive aftermarket and the most fragmented, with the three top distributors holding 38 per cent market share. The Parts Alliance is No. 2 in Britain behind Euro Parts, with a seven per cent market share.

The C$7.1-billion British market is nearly the size of the North American markets. Aging cars and mandatory inspections when vehicles are three years old provide opportunities for future sales growth, Buckley told analysts in a call from London.

"We have selected U.K. as our best entry point into Europe, and identified an acquisition target that gives us a solid leadership position going in and a growing national footprint and significant operational scale."

Uni-Select (TSX:UNS) said its customer base will almost double. It will have 437 stores and 16 distribution centres with the addition of 161 The Parts Alliance corporate stores and 38 affiliated locations serving England, Scotland, Wales and Ireland.

The Parts Alliance has annual sales of US$280 million, and the combined company will have more than US$1.5 billion of revenue and adjusted EBITDA of US$132 million.

Total debt will be around US$464 million.

The Parts Alliance chief executive Peter Sephton will continue to lead the organization and become CEO of Uni-Select's European business segment.

Uni-Select will buy the business under agreements with a private equity fund managed by Hg Pooled Management Ltd. and other shareholders, subject to approvals. The transaction is expected to close in the third quarter.

On the Toronto Stock Exchange, its shares lost $1.03 or 3.4 per cent at $29.36 in afternoon trading.

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News from © The Canadian Press, 2017