LKQ Corp. to acquire Uni-Select for C$48.00 per share in cash

LKQ Corporation (LKQ) and Uni-Select Inc. (UNIEF) announced that they have entered into a definitive agreement for LKQ to acquire all of Uni-Select’s issued and outstanding shares for C$48.00 per share in cash, representing a total enterprise value of approximately C$2.8 billion. Founded in Boucherville, Quebec, Canada in 1968, Uni-Select is a leader in the distribution of automotive refinish and industrial coatings and related products in North America through its FinishMaster segment, in the automotive aftermarket parts business in Canada through its Canadian Automotive Group segment and in the U.K. through its GSF Car Parts segment. With over 5,200 employees, 15 distribution centers and 400+ branches, Uni-Select supports over 70,000 customers annually across the United States, Canada, and the U.K. The Transaction is expected to generate approximately US$55 million of annual run-rate cost synergies by the third year following closing, plus incremental revenue and margin opportunities across the Uni-Select and LKQ businesses The Transaction price of C$48.00 per share represents a premium of 19.2% to Uni-Select’s closing share price on February 24, 2023 and 20.7% to Uni-Select’s trailing 20-day volume-weighted average price. LKQ expects the Transaction to be accretive to its Adjusted EPS in the first year following closing. LKQ intends to fund the Transaction through a combination of cash on hand and new debt. At closing, LKQ expects to have total leverage of approximately 2.4x. consistent with its ongoing strong commitment to maintaining investment grade ratings, LKQ will prioritize de-leveraging and intends to remain highly disciplined with regard to additional M&A activity. LKQ has secured bridge financing commitments from Bank of America and Wells Fargo. The Transaction is not subject to a financing condition. After consultation with its outside financial and legal advisors and after receipt of the unanimous recommendation of a Special Committee of the Board of Directors, the Uni-Select Board of Directors has unanimously approved the Transaction and unanimously recommends that Uni-Select shareholders vote in favor of the Transaction. The Transaction will be implemented by way of a plan of arrangement under the Business Corporations Act and is expected to close in the second half of 2023, subject to customary conditions, including the receipt of anti-trust clearances in Canada, the U.S. and the U.K., approval under the Investment Canada Act, Uni-Select shareholder approval, and court approval. In connection with the Transaction, LKQ will undertake a process to divest GSF Car Parts U.K., Uni-Select’s U.K. based mechanical parts distribution business.