LKQ Corp. and Uni-Select 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, Québec, 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 more than 5,200 employees, 15 distribution centers and more than 400 branches, Uni-Select supports more than 70,000 customers annually across the United States, Canada, and the U.K.

“This acquisition further enhances LKQ’s global automotive vehicle parts distribution business,” stated Dominick Zarcone, president and CEO of LKQ. “Uni-Select’s North American automotive refinish paint and mechanical parts distribution operations complement LKQ’s existing footprint and will allow us to distribute a broader array of products to our customers. 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.”

Zarcone added, “We are also pleased that the acquisition will allow LKQ to build a significant presence in Québec, including Uni-Select’s Boucherville, Québec head office, expanding upon LKQ’s already existing business operations in that province.”

Brian McManus, executive chair and CEO of Uni-Select, commented, “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. We see great opportunities to benefit our customers, employees, suppliers and brands by combining our complementary strengths within the larger, multi-disciplinary and growing LKQ team.”

Transaction Highlights

• Compelling strategic fit. The addition of Uni-Select will enhance LKQ’s business and drive profitable growth
• Complements existing North American paint distribution operations. Uni-Select’s FinishMaster business improves LKQ’s scale and product mix to compete in this attractive and growing segment with minimal integration risk
• Scaled entry into mechanical parts. Uni-Select’s Canadian Automotive Group provides a scaled position in the attractive Canadian mechanical parts space, with opportunity for future consolidation and growth
• Significant cost synergies. 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

Financial Highlights

• 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.

Transaction Details, Timing to Close and Approvals

After consultation with its outside financial and legal advisers 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 (Québec) 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.