“Pittsburgh Glass Works (PGW) has 119 locations. A lot of those will be consolidated into LKQ warehouses or vice versa. We’ll combine our distribution,” said Rob Wagman, LKQ Corp. president and CEO during an investor day in New York City on Tuesday.
In late February, LKQ signed an agreement to acquire PGW from private equity firm Kohlberg & Co. LLC and PPG Industries Inc.
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.
“We are one and done,” Wagman said. “We are not going to do another OE deal. This deal was unique. PGW is a net buyer of glass. They are buying more glass outside of the network because they can’t produce enough to meet their needs. In the event of a downturn, we would simply shift that business from the OE to our own aftermarket business. I’m not wishing for a downturn in OE … but this is a buffer we don’t have in any of our other businesses.”
PGW’s market share is 25 percent in OE and 22 percent in aftermarket glass, according to the CEO.
“There is a great opportunity to expand this business and we will do that,” he said. “We also think it’s a great opportunity for our European operations where we can use our well-built infrastructure in countries we operate. We can put glass on the truck.”
Just about every time an airbag goes off, a new windshield is needed, he explained. This means strong cross-selling opportunities.
“The industry trends on windshields are just phenomenal,” Wagman said. “There is heads up display. There are antennas and rain sensors. There is a defogger that will be able to defog your windshield in 10 seconds. A tremendous amount of technology and PGW is on the leading edge of that.”
The transaction is expected to close in the second quarter of 2016 and is subject to customary closing conditions and necessary regulatory approvals. PGW is being acquired for an enterprise value of $635 million.
PGW serves more than 7,000 aftermarket customers, according to Wagman.
For more on LKQ’s deal to acquire PGW, click here.