Pittsburgh Glass Works (PGW) is No. 1 in OEM glass manufacturing with 20 global customers and No. 2 in aftermarket glass, serving more than 7,000 customers, says Rob Wagman, president and CEO of LKQ Corp., when discussing his company’s planned acquisition of PGW today.
“The acquisition fills a meaningful void in the LKQ product offering worldwide,” he adds. “It’s the only pure-play automotive glass provider in North America. There is significant customer overlap with existing collision-related activities and strong cross-selling opportunities.”
Wagman also sees integration potential between the respective North American aftermarket distribution and warehousing network.
“PGW has a strong and experienced management team,” he says. “We do not anticipate any management turnover.”
Wagman says PGW maintains 97 platform coverage of vehicle models 15 years or younger. In 2014, the company’s unit volume grew by 20 percent, twice the rate of the overall market growth.
“PGW has leading windshield and tempered capabilities at Elkin, N.C., facility to support blue chip OEM customers’ needs for advanced auto glass technology. It has eight fabrication facilities and one float glass facility to provide a global, highly efficient manufacturing footprint,” says Wagman.
PGW also has a growing presence in global markets such as Poland, China and Mexico that allow the company to service growing demand in Europe, Asia and North America, he notes.
Some of the top OEM models PGW serves in both OE and aftermarket glass include:
—Dodge Ram Pickup
The transaction has been approved by LKQ’s board of directors. The company has signed an agreement to acquire PGW from private equity firm Kohlberg & Co. LLC and PPG Industries Inc. for an enterprise value of $635 million.
The closing is subject to customary closing conditions and regulatory approvals. It is expected to close in the second quarter of 2016.
“The deal is consistent with LKQ’s growth and acquisition strategy,” says Wagman. “It has an attractive distribution systems. It expands the product portfolio and allows LKQ to sell deeper into new and existing professional repairer customers across all segments. There are strong barriers to entry. This creates significant synergies and cost savings with existing LKQ footprint.
LKQ Corp. is a provider of alternative specialty parts to repair and accessorize automobiles and other vehicles. The company has operations in North America, the United Kingdom, the Netherlands, Belgium, France, Scandinavia and Taiwan. It offers customers a broad range of replacement systems, components, equipment and parts to repair and accessorize automobiles, trucks, and recreational and performance vehicles.
“PGW transformed itself into a strong global competitor of automotive glass and enjoyed tremendous market and financial success under the stewardship of Kohlberg and PPG,” says Jim Wiggins, chairman and CEO of PGW. “We are excited to become a part of the LKQ family, and expect that the company will continue on its growth and success trajectory under LKQ.”
PGW’s revenue for the 12 months ended October 31, 2015 was approximately $1.07 billion, and LKQ expects the transaction to be accretive to its earnings in 2016. These projected results exclude restructuring and acquisition-related expenses.
The company intends to finance the acquisition with borrowings under its revolving credit facility. As of February 25, 2016, the company had approximately $2.2 billion of available borrowing capacity on its credit facility.