v3.26.1
Business Combinations
 6 Months Ended
Jun. 30, 2026
Business Combination, Asset Acquisition, Transaction between Entities under Common Control, and Joint Venture Formation [Abstract]  
Business Combinations Business Combinations
We completed acquisitions of four businesses within our Europe segment, one business within our North America segment and one business within our Specialty segment, during the six months ended June 30, 2026. Total acquisition date fair value of the consideration for these acquisitions was $104 million, composed primarily of $66 million of pre-existing loans and other receivables effectively settled upon acquisition, $30 million of cash paid (net of cash acquired) and $4 million of other purchase price obligations (non-interest bearing). During the six months ended June 30, 2026, we recorded $36 million of goodwill related to these acquisitions, of which we expect an insignificant amount to be deductible for income tax purposes. In the period between the acquisition dates and June 30, 2026, these acquisitions generated revenue of $14 million and an operating loss of $3 million.

On May 12, 2026, we acquired all of the equity interests of a supplier, RSI North America, Inc. and Rock Solid Industries International (Pty) Ltd. ("RSI"), a leading manufacturer of modular stainless steel truck cap systems from facilities in the United States and South Africa. The purchase price was $66 million and consisted of the acquisition-date fair value of pre-existing loans and other receivables between LKQ and RSI that were effectively settled upon acquisition. The goodwill recorded for our acquisition of RSI, which is reported as part of our Specialty segment, represents the value of future technology and product development opportunities that are expected to enhance RSI's competitive position and support future growth, as well as the economic benefits attributable to LKQ's pre-existing relationship with RSI.

Our acquisitions are accounted for under the purchase method of accounting and are included in our consolidated financial statements from the dates of acquisition. The purchase prices were allocated to the net assets acquired based upon estimated fair values at the dates of acquisition. The purchase price allocations for the acquisitions made during the six months ended June 30, 2026 are preliminary as we are in the process of determining the following: 1) valuation amounts for certain receivables, inventories and fixed assets acquired; 2) valuation amounts for certain intangible assets acquired; 3) the acquisition date fair value of certain liabilities assumed; and 4) the tax basis of the entities acquired. We have recorded preliminary estimates for certain of the items noted above and will record adjustments, if any, to the preliminary amounts upon finalization of the valuations. During the first six months of 2026, the measurement period adjustments recorded for acquisitions completed in prior periods were not material.

The purchase price allocations for the acquisitions completed during the six months ended June 30, 2026 are as follows (in millions):
Six Months Ended June 30, 2026
All Acquisitions
Receivables$6 
Inventories17 
Prepaid expenses and other current assets2 
Property, plant and equipment27 
Operating lease assets13 
Goodwill36 
Other intangibles (1)
42 
Other noncurrent assets2 
Current liabilities assumed(17)
Long-term operating lease liabilities, excluding current portion(11)
Debt assumed(17)
Other purchase price obligations(4)
Settlement of pre-existing balances(2)
(66)
Cash used in acquisitions, net of cash acquired$30 
(1)    The amount recorded for our acquisitions includes $18 million of developed technology (6 year weighted average useful life), $14 million of customer relationships (8.5 year weighted average useful life) and $9 million of trade names (9.3 year weighted average useful life).
(2)    Amount primarily relates to the acquisition-date fair value of pre-existing loans and other receivables between LKQ and RSI that were effectively settled upon acquisition.
The fair value of our intangible assets is based on a number of inputs, including projections of future cash flows, assumed royalty rates and customer attrition rates, all of which are Level 3 inputs. The fair value of our property, plant and equipment is determined using inputs such as market comparables and current replacement or reproduction costs of the asset, adjusted for physical, functional and economic factors; these adjustments to arrive at fair value use unobservable inputs in which little or no market data exists, and therefore, these inputs are considered to be Level 3 inputs. See Note 14, "Fair Value Measurements" for further information regarding the tiers in the fair value hierarchy.

The primary objectives of our acquisitions completed during the six months ended June 30, 2026 were to create economic value for our stockholders by enhancing our position as a leading source for alternative collision and mechanical repair products and to expand into other product lines and businesses that may benefit from our operating strengths.

When we identify potential acquisitions, we attempt to target companies with a leading market presence, experienced management team and workforce, high synergies and/or that add critical capabilities with opportunity for future consolidation and growth. For certain of our acquisitions, we have identified cost savings and synergies as a result of integrating the company with our existing business that provide additional value to the combined entity. In many cases, acquiring companies with these characteristics will result in purchase prices that include a significant amount of goodwill.

Unaudited Pro Forma Financial Information

The following unaudited pro forma financial information presents the effect of the businesses acquired during the six months ended June 30, 2026 as though the businesses had been acquired as of January 1, 2025. The unaudited pro forma financial information is based upon accounting estimates and judgments that we believe are reasonable. The unaudited pro forma financial information includes the effect of purchase accounting adjustments, such as the adjustment of inventory acquired to fair value, adjustments to depreciation on acquired property, plant and equipment, adjustments to rent expense for above or below market leases, adjustments to amortization on acquired intangible assets, adjustments to interest expense, and the related tax effects. These pro forma results are not necessarily indicative of what would have occurred if the acquisitions had been in effect for the periods presented or of future results. The unaudited pro forma financial information is as follows (in millions):

Three Months Ended June 30,Six Months Ended June 30,
2026202520262025
Revenue$3,411 $3,544 $6,901 $6,901 
Income from continuing operations131 183 199 340 

The following table summarizes the significant non-cash investing and financing activities related to our acquisitions (in millions):
Six Months Ended June 30,
 20262025
Settlement of pre-existing balances (1)
$(66)$— 
(1)    Amount primarily relates to the acquisition-date fair value of pre-existing loans and other receivables between LKQ and RSI that were effectively settled upon acquisition.