Boyd Acquires Controlling Interest in Glass America
June 2, 2013
by Penny Stacey, email@example.com
Winnipeg, Manitoba-based Boyd Group Income Fund, which owns Boyd Autobody and Glass, Gerber Collision and Glass and Gerber National Glass Services, has announced that it has acquired a majority ownership and controlling interest in Chicago-based Glass America.
The Fund and its existing operating partner will each contribute their interests in their existing U.S. auto glass business on a relative valuation basis, along with a $6.75 million cash equity contribution into the new entity and will receive a combined equity interest of 70 percent, according to an announcement from Boyd. Boyd will fund $5.75 million of the equity contribution and will hold 55.19 percent of the new entity, as well as operating and Board control positions. The shareholders of Glass America will contribute the business of Glass America on a relative valuation basis for a 30 percent non-controlling interest position. The cash equity contributions by Boyd and its operating partner will be used to pay off third party debt of Glass America, according to the announcement.
"This acquisition is very attractive from both a strategic and a financial point of view," says Brock Bulbuck, president and CEO of the Boyd Group. "The automotive glass restoration business is a natural and complimentary extension of our industry leading collision repair business. This acquisition will increase our U.S. glass business size, both in terms of footprint and annual sales, to become the second largest retail auto glass business in the U.S., servicing 28 states covering approximately 50 percent of the U.S. population. This retail expansion, in combination with our already established nationwide auto glass network, Gerber National Glass Services, significantly improves our positioning with U.S. insurance company customers. Financially, we expect this acquisition to be immediately accretive to our earnings and cash flow, with significant synergy opportunities available over time as the Glass America operations are integrated into Gerber Glass's operating model. It will also better position our glass business for growth alongside our growing collision business."
He adds, "We are also pleased with our continuing partnership with our operating partner Eddie Cheskis, CEO of Gerber Glass, who will co-invest with us and will continue as CEO of our much larger U.S. glass business. While complimentary to our collision business, we also recognize that the auto glass business is somewhat unique and therefore having a recognized industry leader as an operating partner is of great value."
John Teeger, chair of Glass America, says his company will benefit from the deal as well.
"Glass America and its investors will benefit from the transaction by ownership in the second largest windshield repair and replacement entity in the United States and participating in the considerable expected revenue and cost synergy benefits arising from joining with Gerber Glass," he says. “Our customers and employees will benefit from the combined regional spread of operations covering a majority of the states of the U.S., coupled with utilization of the Gerber Glass call center and the financial strength of the combined entity."
Glass America operates 61 auto glass centers in 23 states and had 2012 revenues of $43 million. Gerber Glass operates exclusively under a fully mobile retail glass service model in 12 states and in combination with its Gerber National Glass Services network, had revenues of $ million in 2012.
As part of the deal, the Boyd Group also will have an option and/or obligation to purchase the non-controlling interests' ownership at agreed upon valuation multiples as early as December 1, 2016 under a call option and as early as June 1, 2015, under a put option and therefore Boyd could own 100 percent of the merged entity in the future. Under the call and put options, Boyd will have the option, but not the obligation, to pay the purchase price with Boyd units, according to the announcement.
Rumors had been circulating about a possible sale of Glass America to Boyd early last month.
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