May 30, 2017 by Canadian Underwriter
Boyd Group Income Fund (BGIF) is looking to cement the Boyd Group’s position as a leading provider of collision repair services in Canada with the announcement it has entered into a definitive agreement to acquire the assets and business of Assured Automotive Inc. and related entities.
The acquisition – with a purchase price of $193.6 million – is expected to be immediately accretive to earnings per unit and cash flow per unit, BGIF, an unincorporated, open-ended mutual fund trust created for the purposes of acquiring and holding certain investments, including a majority interest in the Boyd Group Inc. and its subsidiaries, reports.
Expected to be completed within 60 days, the transaction is subject to certain closing conditions being fulfilled, BGIF notes in a statement issued Monday.
“The purchase price of $193.6 million, subject to post-closing adjustments, will be funded by way of $146.1 million in cash and $47.5 million in BGIF units priced at $88.31 per unit,” the statement explains. “After factoring in the $25.5 million in net present value of future tax benefits, the effective consideration is $168.1 million.”
BGIF reports the move would establish the Boyd Group as a market-leading collision repair provider in North America with 474 locations (110 in Canada), 7,300-plus employees and more than $1.5 billion in 2016 pro forma revenue.
In addition, the transaction – which the Boyd Group has entered through a subsidiary company – would further provide a new platform in Ontario that offers the opportunity for additional growth, notes the BGIF statement.
Ontario is Canada’s largest collision repair market and the acquisition would serve to more than double Boyd Group’s Canadian footprint.
Directly and through subsidiaries, the Boyd Group has non-franchised collision repair centres in five Canadian provinces under the trade name Boyd Autobody & Glass and in 20 U.S. states under the trade name Gerber Collision & Glass; is a major retail auto glass operator in the U.S. with locations across 31 U.S. states under a variety of trade names; and operates a third-party administrator, Gerber National Claims Services, that offers glass, emergency roadside and first notice of loss services.
Ontario-based Assured Automotive – which has 68 locations, including 30 intake centres co-located at automotive dealerships – is the largest operator of non-franchised collision repair centres in the country. In business for 30-plus year, the corporately owned organization of auto body/collision has facilities in the Greater Toronto Area and eastern Ontario.
Beyond providing the Boyd Group with scale and a new platform, highlights of the proposed acquisition include the following:
BGIF reported last week that after market close on May 26, it increased its existing revolving credit facility to US$300 million, with an accordion feature that can increase the facility to a maximum of US$450 million. This expanded facility – facilitated through a syndicate of Canadian and U.S. banks that matures in May 2022 – will be drawn on to fund the cash portion of the purchase price.
“We continue to see many attractive opportunities in the market to make accretive acquisitions and execute on our growth strategy,” Pat Pathipati, executive vice president and chief financial officer for the Boyd Group, said at the time.
“This expanded facility, along with flexible covenants and an extended maturity, positions us well to take advantage of those opportunities,” Pathipati noted.
Brock Bulbuck, CEO of the Boyd Group, noted Monday: “Assured, with its strong management team, well-established culture of operational excellence, strong sales growth and commitment to high-quality customer service, is complementary to our existing business and enhances our ability to deliver value to our customers and insurance clients, and, in turn, our unitholders.”
Also like the Boyd Group, Assured Automotive “has pursued an aggressive growth strategy, having added 35 locations, including 17 intake centres, since 2011,” Bulbuck points out.
Related: Assured Automotive forms eastern Ontario subsidiary with collision centre acquisitions
“We expect to combine their leading market position and footprint in Ontario with our resources and acquisition expertise to build new avenues for growth in Canada and the U.S.,” he adds.
For the 12 months ended September 30, 2016, Assured Automotive reported sales of $141 million, EBITDA of $15.5 million and net earnings of $9.6 million, the BGIF statement notes.
“Post-acquisition synergies are expected to contribute an additional $2.0 million in annual EBITDA,” it adds.
Under Boyd Group’s ownership, Assured Automotive will continue to operate and grow under its brand name and continue to be led by CEO Desmond D’Silva and president Tony Canade, who will both join Boyd Group’s management team.
“The combination of our two market-leading companies represents an excellent strategic fit and creates an even stronger industry leader, which will be better-positioned to grow and to deliver innovative, best-in-class service to insurance clients and vehicle owners across North America,” D’Silva comments.
Have your say: