By Amy Antenora

On Friday, aftermarketNews reported that Uni-Select has entered into an agreement to purchase Beck/Arnley Worldparts Corp. and its Canadian subsidiary Beck/Arnley Worldparts Canada ULC. This morning, aftermarketNews spoke with Uni-Select President and CEO Richard Roy, who shared some additional details about the acquisition as well as the company’s long-term plans for the U.S.

This acquisition will be the cornerstone of a strategic initiative to improve parts coverage and better service the growing import nameplate fleet in North America , and will be the start of a new Foreign Nameplate Division at Uni-Select Inc. Uni-Select has been on an active growth streak for the past decade. It is currently Canada ‘s second largest auto parts distributor and seventh in the U.S. Uni-Select ranked No. 9 on Counterman magazine’s Top 20 Superstores of 2007. Out of all 20 companies on the list, Uni-Select had the highest percentage store growth growth (13.1 percent) adding 26 new stores in 2007.

According to Roy, we can expect to see more growth in the future. As the company continues to amass parts distribution entities throughout the U.S. , Roy says Uni-Select is also finding areas of expertise that will serve as growth engines in the future, among them fleet, foreign nameplate product distribution and potentially, retail operations.

Quebec-based Uni-Select has seen incredible growth south of the border since it began investing in the U.S. a decade ago.

“We entered the U.S. market 10 years ago with a small acquisition,” said Roy. “We bought 50 percent of a company that was doing about $60 million at the time. This August will be our tenth anniversary in the U.S. market and we’re going to do an excess of $600 million this year.”

Roy added that the “big change” happened in 2004 when Middle Atlantic Warehouse Distributors, Inc. (MAWDI) joined the Uni-Select family. A few other significant acquisitions followed in recent years, including that of fleet specialists Parts Distributors LLC and Consumer Auto Parts, Inc., last year, and Auto Craft Automotive P rod ucts LLC two years ago.

“We have a strategy of not only working in organic growth but also looking at opportunities for acquisitions at the warehouse distribution level – companies that work a lot with independent jobbers and are focused on national brands. Basically an open warehouse type of concept is what we are focusing on.”

What is Uni-Select’s ultimate goal for the U.S. market? While they are not at present looking to offer coverage from coast to coast, Uni-Select’s acquisition strategy may eventually allow for that to evolve naturally, according to Roy.

“There’s no reason that ultimately we would not have coast to coast coverage in the U.S. over time,” said Roy. “[But] we do not have immediate goals of being coast to coast. We like enter new markets when the acquisition that we’re looking at is significant enough to generate enough of a presence in that area. Even if that place is number four, five or six, as long as there are other acquisitions that can be made in that same area and can be tucked in, to improve the asset realization, it’s something we’re happy to look at.

“We are also looking at acquisitions within the territories that we are already present in, where we can build clusters. For example, MAWDI had already a very good presence in the northeast, and with a few additional acquisitions over the past few years we now have much better market penetration and we are beginning to realize some additional synergies.”

Synergistic Review

Roy said that when considering an acquisition, the company takes a look at four specific synergistic areas:

* Buying conditions: “The first synergy that we look at when we make an acquisition is obviously the buying conditions, with the size that we have and the acquisitions increasing that size, we typically have better buying conditions than some of the smaller players that we’re acquiring, so that is once source of improvement as a result.”

* Logisitics: “The second synergy is logisitics – rationalizing some of the warehouses or delivery routes or branches. That’s really what we’re doing for example this year in the eastern Pennsylvania and New Jersey markets, with the various acquisitions we did last year. We are rationalizing some of our presence there without affecting the quality of the support to the customer base, improving the product assortment and hopefully, being more efficient for them in terms of delivery.

* Marketing: “The third type of synergy we are looking at is our marketing and sales programs, our various loyalty programs we have, our banners and so forth.

* Administrative Resources: “Fourth are back-office synergies in terms of accounting, human resources, IT and so forth. So these are the types of elements we look at when doing these types of acquisitions.”

Finding Niche Markets Along the Way

Once Uni-Select finds an acquisition that meets the above criteria, Roy said the company finds that the unique assets of each new business offer a new level of expertise it can focus on.

“Over and above, we are picking up expertise along the way,” said Roy. “For example, with Parts Distributors we acquired a group people who have excellent knowledge of the fleet business and we’re looking at expanding that as a growth engine for us. When we acquired Consumer Auto Parts back in August, people with very good retail expertise came with the business. Now, I’m not telling you that we are going to become retailers, but certainly in our 260 corporate stores in addition to the 2,000 independent jobbers that we’re serving, wherever we have a location that lends itself to that we could do a little more retail, based on the knowledge that we’ve picked up from Consumer Auto Parts. We use our asset base already present in those locations for better utilization, so we enrich the background of the company with those various people who join us who can teach us new tricks along the way. Hopefully, we can teach them new tricks as well and together we are synergizing and improving.”

Speaking specifically about its acquisition of Beck/Arnley, Roy said it’s a great business that lacked distribution and that’s what Uni-Select can provide.

“Beck/Arnley is a great organization that we are extremely proud to have brought into the family,” said Roy . “We were doing a lot of business with import/foreign nameplate vehicles, but we were not quite satisfied with our coverage and we needed to do more. That segment is more and more present in the fleet as you know. Beck/Arnley is a great company with excellent p rod uct coverage. They lack distribution. I think anybody familiar with them, including themselves, will tell you that they needed a better distribution network and the Uni-Select network brings that to them. We’ll be able to better distribute their p rod ucts across the country to other warehouse distributors and people of our buying group. We’re very happy to offer their products to anybody that has an interest and need for foreign nameplate parts. And, we’ll be very happy to expand the coverage and the geographical distribution network in order to expand that business.”

While Roy said the new Uni-Select Foreign Nameplate Division will focus on expanding distribution for Beck/Arnley products, there could be more acquisitions in the import parts sector in the future.

“It is a possibility,” Roy said. “As you know in the world of acquisitions, you never know exactly what opportunities will surface or when and how quickly. For the moment, what we’re looking at is to expand the distribution network of Beck/Arnley products in six U.S. warehouses and six Canadian warehouses. So, we’ll further deploy more inventory if there are additional acquisitions that come to complement that network. This is a strategy that we have used in the past and there is no reason that we wouldn’t use it in this sector as well. The acquisition field is a little like going fishing – you put your line in the water and you don’t know what you are going to catch and when, so we’re going to keep fishing.”