Uni-Select to be sold to LKQ

An agreement has been reached for LKQ Corporation to acquire Uni-Select Inc. in an all-cash deal.

LKQ will buy all of Uni-Select’s issued and outstanding shares for $48 per share in cash, valuing the transaction at about CAN$2.8 billion. It is expected to close later this year.

Chicaco-based LKQ is a provider of alternative and specialty parts to repair and accessorize vehicles. Uni-Select distributes automotive aftermarket parts and automotive refinishing products in Canada under the Bumper to Bumper, Auto Parts Plus and FinishMaster banners. It supports more than 16,000 automotive repair and collision repair shops and more than 4,000 shops through its automotive repair/installer shop banners and automotive refinish banners. Its network has more than 1,000 independent customer locations with nearly 100 company-operated stores.

In the United States, Uni-Select’s subsidiary FinishMaster has more than 145 automotive refinish company-operated stores, supporting more than 30,000 customers annually. In the U.K., Uni-Select, distributes automotive parts through GSF Car Parts and has more than 175 company-operated stores. However, LKQ has noted it will look to part with the division.

The announcement highlighted the deal as a “compelling strategic fit” with LKQ president and CEO Dominick Zarcone calling it complimentary to the company’s existing offerings and enhancing its offerings.

“We look forward to welcoming Uni-Select’s employees to the LKQ team. Importantly, we believe that our combined efforts will create tremendous long-term value for our customers, shareholders, employees, and other stakeholders as we continue to focus on our operational excellence initiatives,” he said.

Zarcon added that the deal will allow LKQ to boost its presence in Quebec as Uni-Select’s head office is in Boucherville.

Brian McManus, executive chair and CEO of Uni-Select, said the deal will bring more opportunities to customers, suppliers, employees and brands as the two companies combine their strengths.

“The transaction offers compelling value and liquidity to our shareholders and is the culmination of the efforts by our dedicated team to improve our operations and drive efficiencies with a focus on excellent customer service,” he said in the announcement.

Finer details

The deal is valued at $2.8 billion, including debt. . The $48 per share deal is about a 21 per cent premium over Uni-Select’s average trading price the last three weeks. The announcement highlighted that the transaction will find about US$55 million in cost synergies by the third year after closing, on top of other margin and revenue opportunities.

Uni-Select’s board of directors has unanimously approved the deal and recommends shareholders vote in favour.

It is expected to close in the second half of this year. Clearances will be needed in Canada, the U.S. and U.K., on top of shareholder and court approvals.

For the deal to go through, approval will be needed from two-thirds of votes cast during a special meeting of Uni-Select shareholders and a majority of the votes cast on the Transaction at such meeting.

Upon closing of the deal, LKQ will look to sell the U.K. segment, GSF Car Parts.