U.S. auto parts supplier signs deal to buy Quebec’s Uni-Select in $2.8-billion deal

MONTREAL — LKQ Corp. has signed a offer to buy Quebec-dependent Uni-Decide on Inc. in a about $2.8-billion deal that aims to enhance the U.S. automotive equipment supplier’s aftermarket small business amid a thriving current market.

Below the arrangement, LKQ will spend $48 for each Uni-Pick out share in funds for the aftermarket vehicle sections distributor. The buy marks a 19.2 for each cent premium above the $40.28 closing selling price of Uni-Find shares on the Toronto Inventory Exchange on Friday.

The transaction, which needs shareholder approval, also requires antitrust clearances in Canada, the U.S. and the U.K. and approval less than the Expenditure Canada Act.

LKQ chief govt Dominick Zarcone stated the offer will bolster the company’s car or truck pieces distribution and broaden its presence in Quebec.

Uni-Select’s North American operations are a enhance to LKQ’s existing footprint and will present broader product or service distribution, Zarcone explained in a information release.

In link with the offer, Chicago-centered LKQ reported it plans to market GSF Motor vehicle Parts U.K., Uni-Select’s U.K. dependent mechanical elements distribution small business.

Uni-Decide on is known for the distribution of automotive paints, industrial coatings, add-ons and other car solutions for the aftermarket, which refers to elements and providers purchased just after the first sale to the client.

Started in Boucherville in 1968, the firm has additional than 5,200 personnel, 15 distribution centres and a lot more than 400 branches. It supports in excess of 16,000 automobile mend stores and one more 4,000 shops via its fix-installer and automobile refinishing banners.

Some of its 95 company-operated retailers work underneath the names Bumper to Bumper, Auto Sections Plus and Finishmaster.

The aftermarket — everything from tire modifications to brake repair — saw revenue jump more than the earlier two years as offer chain snarls sparked by the COVID-19 pandemic pushed up prices, whilst some funds not invested on holidays went towards property and vehicle advancements.

“The automotive aftermarket remained buoyant in 2022 with a greater part of stores observing increasing product sales and anticipating even further progress through 2023,” Andrew King, taking care of associate at DesRosiers Automotive Consultants, wrote in a be aware this thirty day period.

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“Nevertheless, persistent troubles surrounding components source and costs remain problematic across the business.”

Desjardins analyst Benoit Poirier reported LKQ’s offer you for Uni-Pick was “opportunistic.”

“The industry thinks there is additional upside to be captured,” he reported in a observe to traders, contrasting the $52-for each-share average target stock price with the $48-for every-share purchase rate.

“On the other hand, management and shareholders may possibly be happy with the existing supply supplied the place the inventory was about two several years back — $9.07 prior to Brian McManus’s appointment as govt chair — the probable lack of interest in the GSF asset, its compact measurement vs. the gorilla U.S. players and the attainable problem in Uni-Decide on closing a transformative deal at a sensible valuation.”

Poirier extra that he would “not be stunned” if an activist trader or huge U.S. elements player offers an additional offer, noting that the break up price is unfamiliar.

In a cell phone interview, McManus claimed the board of directors is in the long run liable for weighing the offer.

“Is a certain value at $48 greater than a better rate in the long term with the connected threats? This is the concern that a shareholder will have to inquire himself. We think the selling price is appropriate,” the CEO mentioned.

This report by The Canadian Push was initial posted Feb. 27, 2023.

Firms in this story: (TSX:UNS)

— With files from Stéphane Rolland.

Christopher Reynolds, The Canadian Press