Automotive services provider Driven Brands Holdings, Inc. (DRVN) has acquired auto glass repair firm Auto Glass Now (AGN) for $170 million, thus expanding its presence in the U.S.
Following the completion of the acquisition, AGN will be merged into Driven Brands’ Paint, Collision, and Glass segment, and add 75 locations. Auto Glass Now, which offers auto glass repair, replacement, and calibration services, is expected to generate revenues of around $85 million in the Fiscal Year 2021.
This acquisition will make Driven Brands one of the largest providers of auto glass services in North America. It incurred a fee of $56 million in the fourth quarter as part of the transaction.
Commenting on the deal, Jonathan Fitzpatrick, the President and CEO of Driven Brands, said, “The automotive aftermarket is evolving, and we are incredibly bullish that glass services will be a key beneficiary of that evolution. The growth and highly fragmented nature of auto glass services make our entrance into the U.S. market an ideal strategic investment for Driven Brands.”
The EVP of Driven Brands and Group President of Paint, Collision, and Glass, Michael Macaluso, said, “Glass repairs are growing as a percentage of auto repairs and repair complexity is increasing due to the necessary calibration. Glass presents another exciting opportunity to leverage our proven playbook of consistent and repeatable growth to continue capturing market share.”
This acquisition will boost the company’s presence in the U.S. and Canada to 300 locations.
About Driven Brands
Headquartered in North Carolina, Driven Brands offers automotive services, including paint, collision, glass, vehicle repair, oil change, maintenance and car wash. Its brands include Take 5 Oil Change, Meineke Car Care Centers, Maaco, 1-800-Radiator & A/C, and CARSTAR.
The company has more than 4,300 locations across 15 countries, and services over 50 million vehicles per year.
Wall Street’s Take
On January 5, J.P. Morgan (JPM) analyst Christopher Horvers maintained a Buy rating on the stock and raised the price target to $56 from $54 (68% upside potential).
On January 4, Christopher O`Cull, an analyst with Stifel Nicolaus, reiterated a Buy rating on Driven Brands but refrained from providing a price target.
Overall, the stock has a Strong Buy consensus rating based on 4 unanimous Buys. The average DRVN price target of $45 implies 35% upside potential. Shares have gained 25% over the past year.
According to TipRanks’ Risk Factors tool, Driven Brands is at risk mainly from one factor: Finance & Corporate, which accounts for 30% of the total 77 risks identified for the stock. Under the Finance & Corporate risk category, the company has 23 risks, details of which can be found on the TipRanks website.