by Brigid O'Leary

Belron, the world's largest AGR business, has re-entered the U.S.-market, fulfilling a prophecy chief executive officer Gary Lubner made to AGRR magazine publisher Debra Levy last year during an exclusive interview (see AGRR September/October 2004). The company's purchase of Elite Auto Glass, a regional AGRR business headquartered in Denver, brings them back to the United States. The deal became official on Monday, April 11, and AGRR magazine conducted an exclusive interview with Lubner and Wes Topping, president of Elite in Denver on April 11.

(NO) SURPRISE
Lubner told Levy in June of last year that the United States "[is] a hard market to ignore. It's the biggest market in the world and it remains on our radar screen. It is a market we'll come back to. We just must find a way to get a return on our investment."

In Elite, Lubner says he found a company that will not only offer a return on the investment, but one with which he feels very comfortable doing business. Lubner explained that there are certain criteria that Belron uses to decide if a potential purchase is worth the investment, particularly with regard to re-entering the United States.

"What is critical is, number one, a management team that is strong and successful, has integrity and fairness. Number two is that it is a strong, insurance-led business. Belron business model is built on the insurance link. Number three that it has a strong brand and awareness of the name in the community it serves. Again, this is nothing new for Belron. Number four, that the company is successful, making money and has good prospects that could be the foundation for a future in the United States," Lubner said.

Elite, he said, meets every one of those criteria.

"Wes has a track record in the industry that is second to none," Lubner continued. "He's done huge work with the Chicago Group and he has not arrived on the scene overnight."

Topping is founder and co-chair of the Chicago Auto Glass Group, a not-for-profit corporation created to develop an alternative to the auto glass industry's benchmark pricing system.

It helps that Topping knows how the Belron system works. He worked for Windshield America, a Belron-owned company, before starting Elite.

"He understands the Belron culture," Lubner said.

(NO) CULTURE SHOCK
The Belron and Elite Auto Glass cultures are very similar; so much so that it gave Topping some peace of mind about the sale.

"The comfort level was there with Gary and his staff," Topping said. "It was extremely important to me, also, to find a buyer who has integrity, because obviously we've been operating on a strong, positive basis. We've always been honest with our customers and had strong integrity and we were looking for a buyer who fit into that same philosophy and Belron certainly does that."

The similarities between the two companies are helping the transition, especially since very little about the company is changing. Topping will remain in charge of Elite, becoming what Lubner described as "person who's accountable for Belron's U.S.-business now," and according to Topping, the senior management under Elite will remain in place. All the employees will be retained as well, something Topping particularly wanted to see happen with the company to which he agreed to sell and an aspect of the sale that, according to Topping, has eased the minds of his employees.

"I think the entire group has been very glad to hear that our name stays intact, our employees [will] continue in their same function, there is really no interruption in management of the company," he said.

Job security ensured, Topping indicated that past that, he had only heard positive feedback from the rest of the Elite team where company's sale was concerned, a feeling that Lubner experienced, too.

"I was fully prepared, and quite honestly, expected, I wouldn't say a negative reaction but a probably neutral to 'big company coming in and buying us' [feeling] … and I have to say I found, you know, the complete opposite. I found a bunch of people who were enthusiastic about it," Lubner said of his visit to several of the Colorado facilities.

That's not to say that there weren't any concerns at all. Topping and Lubner visited the facilities to give employees a chance to ask questions they had regarding the sale.

"We were in all of the workshops, talking to the technicians, we were talking to everyone [letting them] ask the tough questions, anything [they] wanted to ask me, anything [they were] worried about I think in one of the first buildings we went to, one of the guys said to me, 'Are you going to take all of the inventory out?'" Lubner recounted. "I said, 'Why would I do that?' and he said 'Well, the last time I was involved in a takeover, that's what happened. They came in and took all the inventory.' And I said 'Well, the only reason we would ever do that is if Wes thought it was a good idea, but I'm certainly not going to come in here from London and make those sort of decisions.' I think [it helps] once you talk through those sort of concerns with people."

The concerns that were raised, as evidenced by Lubner's examples, came from those employees who had gone through takeovers with other employers, something Topping confirmed during the interview.

"They'd been involved in a takeover with a public company," he explained. "Obviously, some of the big companies that have taken over have all of a sudden forced their culture. I think that's the key, most of these things in the past have been "takeover" where they come in and put their management team in place and everyone runs for cover. In this case, Belron is a wonderful, international company and unless I have missed somebody, they really don't have anyone here in the U.S. who is going to be telling the installers and the CSRs how to answer the phone and install glass."

(NO) INDUSTRY-WIDE IMPACT
Alleviating employees' concerns is one thing. Alleviating the concerns of the industry or the competition is another. In his interview with Levy last year, Lubner made it clear that reentering the U.S. market was a possibility, but he made it equally clear that he felt that the state of the industry-particularly the very heated area of pricing-was very, very chaotic. He remains unwavered in that opinion, but while others may view it as such, the purchase of Elite was not made so that he could play Superman.

"We do not see ourselves as the saviors of the American auto glass industry. We run these businesses all over the world. We think we can have a successful U.S. business and we'll do what it takes to make it successful. We're not here to try to cure the ills of the world," he said.

For those who see the buy-out as the first step in a succession of acquisitions to become a powerhouse in the States, too … well, to that extent, Lubner dismisses any active concerns about Belron's future in the United States as inconsequential.
"I think there's a risk of this thing being blown out of proportion. Let's be clear here. Belron in the [United States] is a relatively small business compared to the U.S. market. The market share wouldn't make the scale," said Lubner. "We're certainly not pretending we're here to make a huge impact on the industry. We're here because we found a business that fits with us, that has good opportunities and we're going to go from there. We have no grand plan or … missionary zeal to take over the world. That's just not the way we operate."

Though Lubner declined to discuss business strategy past the purchase of Elite, he left the door open for future expansion. When asked, specifically, if there were any truth to the theory that he was looking to former members of the National Auto Glass Cooperative as potential acquisitions, he responded this way:

"I'll answer that two ways. Number one, we're not in discussions with anyone at the moment. Number two, we believe that strong regional players that meet the criteria I talked about earlier-and that is true in the U.S. or any other market in the world-are always going to be interesting to Belron."

(NO) HARD DECISION
From the industry reactions that Topping has received since the March announcement that the deal was in the works, there is an indication that others are interested in the possibility of a Belron buyout, too.

"[I've gotten] mostly congratulations. 'Gee, I wish I had been the person they were talking to, first.' 'Here's my phone number, can you please call me after you guys settle things down a little bit?'" Topping said with a chuckle. "I think in every case I've gotten congratulations. 'How'd you pull this off?' I think it'll be a great time between the Elite brand and the Belron senior management and I'm looking forward to it."

But what was it like, for Topping, a man known in the industry for being an independent and championing the little guy making the decision to sell to Belron? Surprisingly, not as hard as one might think.

"I had been looking for an exit plan for the last 2 or 3 years, really. And one of the requirements was to find a party that I was very comfortable with. And one that would take all of our employees, all of our companies," he explained. "If it were 10 years earlier, I'd still be doing it and probably would not be selling to Belron, really, because I have a lot of fun running the business. It's a good business."

To read the transcript of Brigid O'Leary's interview with Gary Lubner and Wes Topping, click here.