Quebec's Uni-Select goes into the hands of American interests
The transaction concluded with the LKQ Corporation is valued at 2.8 billion Canadian dollars.
Uni-Select has more than 5200 employees, 15 distribution centers and more than 400 branches in Canada, the United States and the United Kingdom. Its head office is located in Boucherville.
Quebec auto parts supplier Uni-Select is going into American hands.
Although analysts were optimistic about the potential to term of the Quebec auto parts supplier Uni-Select, its big boss believes that the purchase price offered by the LKQ Corporation is attractive for the shareholders of this company based in Boucherville.
LKQ Corporation is offering $2.8 billion, or $48 per share, to get its hands on Uni-Select, the two companies announced earlier Monday. That's a 19.2% premium to the stock's closing price last Friday.
If it gets the green light from the regulatory authorities, this transaction will represent the culmination of the Quebec company's recovery strategy. Under Uni-Select Chairman, CEO and CEO Brian McManus, who took over in the spring of 2021, the stock had already tripled in value before the transaction was announced. .
After the publication of the results last week, Uni-Select was in a good position to continue its growth, according to analysts who follow this company. On average, they anticipated that the stock might be worth more than the price offered by LKQ. Their average target price was $51, according to Refinitiv.
The board, however, had a responsibility to assess LKQ's offer, McManus said in an interview, acknowledging that the idea of selling the company, whose he is also a shareholder, arouses bittersweet contradictory feelings in him. Is a guaranteed price of $48 better than a higher price in the future with the associated risks? This is the question a shareholder must ask himself. We think the price is right.
The offer to purchase demonstrates the success of Uni-Select's recovery plan, according to Mr. McManus. However, it should not be concluded that the action would have progressed at the same rate thereafter. We were able to reap the easiest fruits to pick over the next 18 months. Yes, there are other opportunities ahead of us, but the fruits are a bit higher up the tree, the CEO asserted illustratively.
Under current conditions, analyst Benoit Poirier of Desjardins Capital Markets says he would not be surprised if another buyer were to up the ante.
National Bank Financial analyst Zachary Evershed acknowledges that some shareholders may wonder if management is selling the company too early in the turnaround process. Our first conversations with shareholders have a generally positive tone. We therefore do not believe that there will be significant opposition.
Uni-Select, which was founded in 1968 in Boucherville, Montérégie, is known for the distribution of automotive paints, industrial coatings, accessories and other automotive products for the automotive aftermarket. This company has more than 5,200 employees, 15 distribution centers and more than 400 branches.
The LKQ Corporation notably owns an auto parts recycling site in Pintendre, near Lévis.
Mr. McManus believes this transaction is good for Uni-Select's Quebec operations. They [the LKQ Corporation] don't have operations like ours [in Quebec]. That means our team in Canada is going to be there and they [LKQ] are going to need us.
President and CEO of LKQ Corporation , Dominick Zarcone, had also stated in a press release that the acquisition was an opportunity for this American company to establish a significant presence in Quebec, including at the head office in Boucherville.
Mr. McManus added that the fact that LKQ is a bigger fish than Uni-Select could provide new means for teams in Quebec.
The boss of ;Does Uni-Select intend to continue working within LKQ? I think I'm going to be part of the synergies,” McManus said with a laugh. He assured that he will remain in office until the transaction is concluded.
Uni-Select's action had gained 6 $.69, or 16.61%, to $46.97 at the close of the Toronto Stock Exchange.
