Major consolidators questioning their business model

This project under consideration may have resulted due to pressure from activist investors, particularly powerful for a listed company, and specifically from the Elliott Investment Management fund, which has just sent two directors to the GPC board.

A few weeks later, it was LKQ’s turn to make headlines. The activist investment fund Ananym Capital urged it to divest its European operations. This was due to July’s results falling short of expectations, prompting a 20% slide in the share price. And the European results for the third quarter (organic sales down 4.7%) did nothing to revive the European machine. Shareholders were not reassured by its objective explanations: a difficult economic climate, increased competition, a strategy focused on profitable customers, and the sale of the Polish, Slovenian and Bosnian businesses in 2024, representing a $10 million drop in revenue. The upshot is that EBITDA stands at 10% for this European activity, which accounts for more than half of the distributor’s global business, compared with 14% in the US. As a result, the 2025 forecast has been revised downwards to between -3% and -2%. This has led to pressure from shareholders on the ‘Europe’ division, while the US division had already streamlined its organisation by selling one of its historic pillars, ‘LKQ Pick Your Part’, and is now actively seeking a buyer for Keystone Automotive Industries, its flagship division for bodywork and specialised parts, potentially valued at around $1 billion.

At the end of 2025, although none of these announcements had yet led to any strategic moves that could destabilise the business, they did raise many questions among suppliers. They also raised some hopes among competing distributors, who are already looking with interest at opportunities to gain market share or even take over attractive structures put back on the market by one of these two giants. At LKQ, it is rumoured that Rhiag, the cornerstone of the Chicago-based distributor’s footprint in Italy, could change hands as early as the beginning of 2026. After a wave of consolidations that enabled LKQ to build its €6 billion ‘European base’, players are waiting with curiosity, not to say interest, for a tsunami of deconsolidation in 2026. And yet, on the European management side, Andy Hamilton seems to remain calm (see P.63), believing that the current turbulence has more to do with bringing coherence to this still overly diverse group than with the collapse of an empire. And some observers are not far from sharing his view, given the solid foundations of this European leader. Thus, the few cutbacks, “necessary for the coherence of the whole”, should not lead to the collapse of the edifice. Others see a dual negative effect from the need to outperform in order to meet stock market requirements focused exclusively on short-term profitability and double-digit EBITDA, and the conviction that underperforming European practices must be reformed. The result is organisations that are moving away from customer expectations, focused on the need to transplant the US model into their business plans!

GPC and LKQ are being caught up by the integration of standardised processes at a time when the economic dip is exacerbated by the bursting of the ‘oxygen bubble’ of the four post-Covid years and its double-digit growth. It is therefore necessary to seek, quickly and relentlessly, the growth expected by shareholders from the promised synergies! Others temper this analysis by noting that business is tough for everyone and that the current questions are the result of purely financial strategic considerations by shareholders and boards of directors that “have nothing to do with operations, the quality of the teams on the ground, or the specific nature of the European market. These are simply decisions about the allocation of financial resources”, says an expert on the intricacies of European distribution.

Whatever happens, the landscape is sure to change in 2026. It remains to be seen how far these two leaders will push the boundaries in their domestic American market or in their European conquests. Watch this space.