ORLANDO, Fla. — General Automotive Co., a North American provider of aftermarket parts and advanced technology for the automotive industry, has signed a non-binding letter of intent to acquire privately held Europacific Parts International Inc. (EPI) for stock. The transaction is expected to further position the company to capitalize on growing consumer preferences for extending the life of their vehicles in the current economic downtown.
EPI, based in Irvine, Calif., is a major U.S. importer and distributor of high quality auto parts for European- and Asian-manufactured automobiles. EPI, which reported unaudited revenue of approximately $29 million in 2008, will operate as a wholly owned subsidiary of General Automotive. Additionally, key EPI executives will be retained to ensure smooth integration and operational continuity.
Joseph DeFrancisci, president and CEO of General Automotive, said the proposed acquisition is a critical milestone in the company’s strategy to acquire established businesses with strong growth and profit potential in the $265 billion automotive aftermarket parts industry.
"We expect the EPI acquisition to help establish General Automotive as a major, diversified player in the automotive aftermarket industry — an industry estimated at $265 billion annually and growing," said DeFrancisci. "EPI is a premier domestic distributor of quality new parts for most of the leading automakers in Germany, Sweden, Japan and Korea. The company has a large and varied customer base, which is supported by a solid sales infrastructure and an advanced supply chain management system. Post acquisition, we expect to leverage this growth platform with a series of initiatives designed to enhance EPI’s revenue and profitability. In the meantime, we continue to evaluate additional acquisition targets."
DeFrancisci added, "The automotive aftermarket parts industry is showing strong gains in recent quarters due to the economic downturn that has car owners electing to extend the life of their vehicles while delaying new car purchases. This presents General Automotive with an extraordinary growth opportunity — to acquire and operate growing businesses with high profit potential in select automotive segments capable of thriving no matter what the prevailing economic conditions."
Under terms of the non-binding letter of intent, General Automotive will issue four million shares of restricted common stock to the current owners of EPI. EPI’s stockholders can earn an additional four million shares over the next six years based on the achievement of certain revenue and profitability milestones.
Closing of the EPI transaction is subject to completion of due diligence and other conditions. In connection with the acquisition and with its overall growth plan, General Automotive expects to raise additional capital in 2009.
