LKQ Corp., the parent company of Keystone Automotive and NTP-Stag, has signed a definitive agreement to acquire Coast Distribution, a parts and accessories distributor, for $5.50 per share in cash.
LKQ Corp. Director of Investor Relations Joseph Boutross said that the acquisition adds to the company’s existing product offering in addition to its distributor network, saying the deal provides “private-label opportunity; they have some different skews and they have a little geographic presence that we don’t have.”
Coast has 17 distribution hubs across North America, three of which are in Canada in Langley, B.C., Calgary, Alberta and St. Bruno, Quebec.
Boutross was unable to provide additional information because the deal had not been finalized, but expects more details about the terms of the agreement in a tender offer document released in the next two weeks.
Under the terms of the agreement, a subsidiary of LKQ will commence a tender offer to acquire all outstanding shares of Coast’s common stock for $5.50 per share in cash.
Coast’s Board of Directors has unanimously recommended that Coast stockholders accept the offer and tender their shares. Total cash consideration payable for Coast’s outstanding shares is approximately $29 million. As of June 30 Coast had $19.5 million outstanding under its long-term revolving bank line of credit.
“The combination of Coast with our specialty segment and RV business presents tremendous distribution and logistics synergies with our existing network, and expands our RV business with the addition of unique product offerings and brands,” LKQ CEO and President Robert L. Wagman said in a news release.
In October last year, LKQ subsidiary Keystone Automotive, consolidated large swaths of the North American RV distribution business in an acquisition of Stag-Parkway, adding the company to NTP to create NTP-Stag.
In its latest acquisition, LKQ will need to acquire a majority of Coast’s shares through an official tender offer, which must be made within 10 business days, and last for the following 20 days.
Any shares not tendered in the offer will be acquired, following consummation of the tender offer, in a second step merger at the same cash price as in the tender offer. The acquisition is currently expected to close in the third quarter of 2015.
At 12:30 p.m. Eastern Time, Coast stock was trading at $5.47 a share, up 51.10 percent for the day.
Business as Usual
Alongside the announcement this morning, NTP-Stag West Sales Director Fred Petrivelli sent an email to dealers announcing the deal and promising the acquisition would provide “the ‘best of both worlds’ approach we started during the NTP-Stag integration.”
“Due to our recent investments in capacity and training (in all functions), we feel great about the opportunity to deliver benefits for our collective stakeholders. We are thankful that our loyal customers and suppliers supported us during the last integration and look forward to continued improvements and success as we move ahead as one,” Petrivelli said.
Petrivelli said the companies would continue “business as usuall” until the deal is completed.