Uni-Select Inc. today announced that it has entered into an agreement to sell substantially all of the assets of Uni-Select USA Inc. and Beck/Arnley Worldparts Inc. to an affiliate of Icahn Enterprises L.P. at a purchase price of approximately $340 million, subject to adjustments based on the net tangible book value of assets sold at closing.
The transaction results from preliminary discussions initiated in January 2015, which led to the agreement for the sale of 39 distribution centers and satellite locations, and 240 corporate stores involving a total of 2,960 employees. FinishMaster, Uni-Select’s automotive paint distribution activities, as well as its Canadian automotive parts and paint distribution business unit, are not subject to the transaction.
The transaction is expected to close during the first half of 2015 and is subject to customary closing conditions, including obtaining regulatory approvals. The transaction has been approved by the Board of Directors of Uni-Select. The board considered among other things an opinion from RBC Capital Markets that the consideration to be received by the corporation under the transaction is fair, from a financial point of view. The transaction is not subject to shareholder approval.
"We are very pleased with the agreement and its terms. Building on the momentum of the positive fourth quarter and fiscal 2014 financial results to be announced Thursday, today’s transaction unlocks value for our shareholders, strengthens our balance sheet, profitability and future growth potential, while enabling us to repay our debt. After a thorough review of our operations, we have concluded that the sale of our U.S. automotive parts distribution activities is in the best interests of the corporation and our shareholders and will allow us to focus on our current strengths and core businesses,” said Uni-Select President and Chief Executive Officer Richard G. Roy. “Icahn Enterprises is a large company with resources to grow and strengthen the business and is committed to a seamless transition for customers, manufacturer partners and team members. I also wish to sincerely thank the Uni-Select teammates impacted by the transaction for their commitment, professionalism and dedication to serving our customers,” Roy added.
"Today’s announcement reflects our strong commitment to our automotive parts and paint distribution activities in Canada and our automotive paint distribution activities in the U.S. through FinishMaster, and allows us to further accelerate growth, both organically and through acquisitions as both markets present various opportunities for future development,” said Uni-Select Chief Operating Officer Henry Buckley.
Carl C. Icahn, Chairman of Icahn Enterprises, commented, "Icahn Enterprises is constantly looking for companies to own or control (i.e., own over 50%). The assets of the companies we control currently total over $20 billion, up from approximately $1 billion at the beginning of 2000. This does not include the value of the securities held by the funds in our Investment segment, which total over $15 billion. With the advent of the bull market over the last five years, it has become increasingly difficult to find companies that we believe to be undervalued and with growth potential. That is why we were happy when we learned that the United States segment of Uni-Select was available."
"We believe that with Icahn Enterprises' great resources and our knowledge of the industry we will be able to grow this company, take advantage of consolidation opportunities, and thereby greatly benefit the company's customers, manufacturer partners and employees, as well as the shareholders of Icahn Enterprises."
The auto parts distribution business acquired from Uni-Select USA will be operated independently from Federal-Mogul Holdings Corporation, an Icahn subsidiary and a leading global supplier of automotive products and services. All transactions between the two companies will be on an arms-length basis and approved by the independent directors of each company, Icahn said. In connection with the transaction, Carl C. Icahn will resign as the Chairman and member of the board of Federal-Mogul and Daniel A. Ninivaggi, the Co-Chief Executive Officer of Federal-Mogul, will resign as a director of Icahn Enterprises L.P.
In connection with the transaction, Uni-Select has also entered into a transition agreement with the acquirer to ensure an orderly and smooth transition for employees, customers and suppliers upon closing of the transaction.
In the first quarter of fiscal 2015, the corporation expects to incur an estimated after-tax loss ranging from $80 million to $100 million in connection with the sale of the net assets of the business units and other related charges. The loss will reflect transaction-related costs, the termination of service contracts, restructuring charges, a write-down of intangibles (mostly IT systems) and a write-down of a portion of goodwill. Approximately $20 million in after tax cash outlays are expected to be required to settle the transaction and restructuring costs.
RBC Capital Markets acted as financial advisor to Uni-Select. McCarthy Tétrault LLP and Barnes & Thornburg LLP acted as Canadian and US legal counsel, respectively, to Uni-Select. Norton Rose Fulbright Canada LLP acted as legal counsel to the acquirer.
Founded in 1968, Uni-Select is a major distributor of replacement parts, equipment, tools, accessories, paint and related products for motor vehicles in North America. A leader in the Canadian industry, Uni-Select is the fifth largest distributor in the United States and the leading independent distributor of automotive paint and related products in the country. With its 5,300 employees, Uni-Select efficiently services a wide network of independent installers and wholesalers, including more than 6,700 that operate under one of its banner programs in North America. Uni-Select is headquartered in Boucherville and its shares are traded on the Toronto Stock Exchange (TSX) under the symbol UNS.
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