Loxley Plc, one of Thailand's largest trading conglomerates, has formed a joint venture with US auto parts maker FederalMogul Motorparts to distribute spare parts in Thailand and Indochina.
Suraphand Bhasitnirandr, Loxley's senior executive vice-president, said the US company had agreed to take a majority stake of 51% in Parts Zone (Thailand), Loxley's subsidiary, for 60 million baht.
With Federal-Mogul Motorparts' investment, Loxley's holdings in Parts Zone (Thailand) will drop from 70% to 46%.
Founded in 2004, Parts Zone is the multi-brand distributor of equipment and tools for vehicle services, industries and other uses. The head office and warehouse is in Bangkok's Min Buri district, with branches in Chiang Mai and Surat Thani.
Federal-Mogul Motorparts is one of two divisions under the Nasdaq-listed Federal-Mogul Holdings Corporation, founded in 1899 and based in Michigan.
After forming the joint venture, Parts Zone will become an auto parts distributor for the replacement market, covering all vehicles and motorcycles
Three popular brands of FederalMogul Motorparts - Ferodo, Champion and Moog - will be imported mainly from China and the US to be sold in the Thai market.
Wachira Yongyai, managing director of Parts Zone, said the investment of FederalMogul Motorparts in the company would help strengthen its financial status and product portfolio in the long term.
He said the company planned to expand to four branches in Greater Bangkok next year with a total investment of 20 million baht.
Mr Suraphand said once Parts Zone was strong enough in Thailand, possibly over the next three years, the next step would be expansion to Cambodia, Laos, Myanmar and Vietnam.
He expects Parts Zone to generate sales of 240 million baht in 2015, rising to over 600 million baht by 2020.
Mr Suraphand said Loxley's revenue in 2015 was likely to stay flat at 15-16 billion baht, compared with 15.28 billion baht last year.
But in 2016, Loxley expects its revenue to increase by 15%, driven by its backlog worth 9 billion baht.
LOXLEY shares closed yesterday on the Stock Exchange of Thailand at 2.76 baht, up 14 satang, in trade worth 25.7 million baht.