Uni-Select Inc. has entered into agreements with a fund managed by Hg Pooled Management Ltd. and other minority shareholders through which its wholly owned U.K. subsidiary will acquire 100 percent of the shares of PA Topco Limited, doing business as The Parts Alliance, the second largest independent distributor of automotive aftermarket parts in the U.K. The transaction value is approximately £205 million (approximately $264.37 million USD) on a cash-free and debt-free basis, subject to working capital and other customary adjustments. The transaction is fully funded with debt.

“We are excited to establish a third growth pillar in the large U.K. parts aftermarket that is expected to be immediately accretive in a market with great upside potential from future consolidation opportunities. Parts Alliance is a great organization, with a market leadership position and national scale, a proven growth platform and an experienced management team that has demonstrated its ability to drive profitable growth both organically and through acquisitions,” said Henry Buckley, president and CEO of Uni-Select. “Our two companies are a perfect fit in terms of business profile, customer focus, entrepreneurial culture and commitment to people development.”

Headquartered in Solihull, England, Parts Alliance has grown rapidly in recent years to become the second largest player in the U.K. automotive aftermarket parts market with an approximate 7 percent share, according to the company. It services more than 23,000 customer accounts through 161 corporate stores and 38 affiliated locations in its network, providing 85 percent national coverage, and employs more than 2,900 team members.

On an unaudited basis, for the fiscal year ended April 30, 2017, Parts Alliance recorded £264.9 million (approximately $341.62 million USD) in sales and £17.8 million (approximately $22.95 million USD) in operating earnings before interest, taxes, depreciation and amortization and non-recurring costs (adjusted EBITDA). Including the most recent acquisition completed to date, Parts Alliance’s run-rate adjusted EBITDA is estimated at £21 million (approximately $27.08 million USD), on an estimated £280 million (approximately $361.09 million USD) in sales. Uni-Select estimates a purchase price multiple of 9.7x based on run-rate adjusted EBITDA.

Uni-Select says the transaction provides the company with an attractive point of entry into a new geographic market currently in consolidation with high growth and accretion potential and a third growth pillar to complement its segments, Canadian Automotive Group and FinishMaster US. Continued growth, driven mostly by growing and aging U.K. car park, is expected.

“We have full confidence that by partnering with Uni-Select, our capability to grow our operations further has significantly increased, all to the benefit of our customers, team members, associates and suppliers,” said Peter Sephton, president and CEO of Parts Alliance.

Upon closing of the transaction, Sephton will join Uni-Select’s executive team while continuing his leadership role in the U.K. as president and CEO of the European business segment.