Carl Icahn's investment company has agreed to acquire Precision Auto Care, adding more than 250 locations to the investor's interest in 1,000 auto-repair shops.
Terms of the deal were undisclosed, but The Wall Street Journal said it was worth about $35 million.
Icahn Automotive Group has been buying auto service and repair companies over the past few years, expanding its presence in the auto service industry.
The acquisition also includes Precision Auto Wash and Precision Lube express centers.
"Coupled with our existing footprint of more than 1,000 corporate-owned locations, as well as our in-house automotive parts and tire distribution capabilities, we are uniquely positioned to provide high-quality parts, tires and services to our customers at the most competitive price," Icahn Automotive CEO Daniel Ninivaggi said in a statement.
Robert Falconi will remain CEO of Precision Auto Care.
The deal positions Icahn Automotive to take advantage of anticipated increases in fleets, ride-hailing and ride-sharing services and rental cars, Carl Icahn told The Wall Street Journal in an interview. His goal is to build a network that makes, sells and installs parts, specifically positioning itself for widespread fleet and ride-hailing business, which is often handled by local stores or regional operations.
Precision Auto Care, headquartered in Leesburg, Va., joins Icahn's other parts-and-repair companies Pep Boys and Just Brakes, along with the Auto Plus aftermarket parts distributor. Icahn this year took 100 percent control of diversified auto supplier Federal-Mogul Holdings Corp., which owns several major aftermarket parts brands such as Champion Spark Plugs and ANCO wiper blades. Icahn also owns shares in the ride-hailing service Lyft and car rental giant Hertz Global Holdings Inc.
But the Precision Auto Care acquisition poses potential supply-chain risks for Icahn, said Nick Mitchell, an analyst for Northcoast Research.
By expanding downstream assets with the acquisition of a service and repair company such as Precision Auto Care, Icahn risks jeopardizing business with some customers higher up in the supply chain that have business with Auto Plus or Federal-Mogul.
"The risk is that your existing customers decide not to do business because you're venturing into their neck of the woods," Mitchell said.
He said it's no secret that Icahn wants more installation and service operations, but whether he can acquire them fast enough to maintain control over their manufacturing and distribution assets is in question.
"If those businesses think they're becoming a competitor, you run the risk that they will look elsewhere for their parts and preferred distributors," Mitchell said. "And that could create a shortage of demand for Auto Plus or indirectly for Federal-Mogul."