04:49:32 EDT Fri 29 Mar 2024
Enter Symbol
or Name
USA
CA



Boyd Group Income Fund
Symbol BYD
Shares Issued 18,065,558
Close 2017-05-26 C$ 89.77
Market Cap C$ 1,621,745,142
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Boyd to acquire collision repair outfit for $193.6M

2017-05-29 06:30 ET - News Release

Mr. Brock Bulbuck reports

BOYD GROUP INCOME FUND TO ACQUIRE CANADA'S LARGEST NON-FRANCHISE COLLISION REPAIR COMPANY WITH 68 LOCATIONS

Boyd Group Income Fund has, through a subsidiary company, entered into a definitive agreement to acquire the assets and business of Assured Automotive Inc. and related entities. Assured is the largest operator of non-franchised collision repair centres in Canada, based in Ontario. The acquisition is expected to be immediately accretive to earnings per unit and cash flow per unit.

Transaction highlights

  • Market leading scale -- further establishes Boyd as a market-leading collision repair provider in North America with 474 locations, over 7,300 employees and over $1.5-billion in 2016 pro forma revenue;
  • New Ontario platform -- adds market-leading presence in Canada's largest collision repair market with 68 locations, more than doubling Boyd's current Canadian footprint;
  • Track record of growth -- adds a proven management team to Boyd's senior management, with a record of delivering a five-year revenue CAGR (compound annual growth rate) of 24.7 per cent through a combination of strong organic same-store sales growth and M&A (merger and acquisition) growth;
  • Immediately accretive -- expected to be immediately accretive to earnings per unit and cash flow per unit;
  • Additional tax benefits -- tax-efficient acquisition structure creating net present value of future tax benefits of $25.5-million;
  • Attractive platform valuation -- net of tax benefits, represents a purchase valuation multiple of 8.3 times adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) for the trailing 12 months ended March 31, 2017, normalized for non-recurring expenses and postclosing synergies;
  • Significant balance sheet capacity for additional growth -- On May 26, the fund increased its existing revolving credit facility to $300-million (U.S.), with an accordion feature which can increase the facility to a maximum of $450-million (U.S.). Posttransaction, Boyd Group will have pro forma net debt to adjusted EBITDA of approximately 1.5 times.

"The acquisition of Assured is a significant strategic move for Boyd that further positions us as a leading provider of collision repair centres in Canada and North America," said Brock Bulbuck, chief executive officer of the Boyd Group. "Assured, with its strong management team, well-established culture of operational excellence, strong sales growth and commitment to high-quality customer service, is complementary to our existing business and enhances our ability to deliver value to our customers and insurance clients, and, in turn, our unitholders."

Assured operates 68 collision repair centres in Ontario, including 30 intake centres co-located at automotive dealerships. With the acquisition of Assured, the Boyd Group significantly expands its footprint to 110 locations in Canada and 474 locations across North America. Furthermore, the Assured acquisition provides a market-leading platform for the Boyd Group in Ontario, Canada's largest market. Under Boyd's ownership, Assured will continue to operate and grow under the Assured brand name and will continue to be led by Desmond D'Silva, CEO of Assured, and Tony Canade, president of Assured, who will join Boyd's management team.

"We are looking forward to being part of the Boyd Group, both as part of the leadership team, as well as significant unitholders," added Mr. D'Silva. "The combination of our two market-leading companies represents an excellent strategic fit and creates an even stronger industry leader which will be better positioned to grow and to deliver innovative, best-in-class service to insurance clients and vehicle owners across North America."

For the 12 months ended Sept. 30, 2016, Assured reported sales of $141-million, EBITDA of $15.5-million, adjusted EBITDA (normalized for non-recurring expenses) of $17.8-million and net earnings of $9.6-million. For the 12 months ended March 31, 2017, Assured reported sales of $150-million and adjusted EBITDA (normalized for non-recurring expenses) of $18.2-million. Postacquisition synergies are expected to contribute an additional $2.0-million in annual EBITDA.

The transaction is expected to be completed within 60 days, subject to certain closing conditions being fulfilled. The purchase price of $193.6-million, subject to postclosing adjustments, will be financed by way of $146.1-million in cash and $47.5-million in Boyd Group Income Fund units priced at $88.31 per unit. After factoring in the $25.5-million in net present value of future tax benefits, the effective consideration is $168.1-million. The acquisition of four new locations (including two intake centres) added by Assured subsequent to March 31, 2017, will be completed concurrently and will result in incremental purchase price.

On May 26, the fund increased its existing revolving credit facility to $300-million (U.S.), with an accordion feature which can increase the facility to a maximum of $450-million (U.S.). The facility was facilitated through a syndicate of Canadian and U.S. banks and matures in May, 2022. This expanded facility will be drawn on to finance the cash portion of the purchase price. Following the transaction, the Boyd Group will have pro forma net debt to adjusted EBITDA of approximately 1.5 times, excluding in-the-money convertible debentures.

"It is important to note that Assured, like Boyd, has pursued an aggressive growth strategy, having added 35 locations, including 17 intake centres, since 2011," added Mr. Bulbuck. "We expect to combine their leading market position and footprint in Ontario with our resources and acquisition expertise to build new avenues for growth in Canada and the U.S."

Deloitte LLP and Acumen Corporate Development Inc. acted as advisers to the Boyd Group, and Thompson Dorfman Sweatman LLP acted as Boyd Group's lead legal adviser. Jefferies LLC acted as lead financial adviser to Assured and DLA Piper (Canada) LLP acted as Assured's legal adviser.

Conference call

Boyd Group Income Fund will host a conference call, including a slide presentation, to discuss the transaction on Monday, May 29, 2017, at 10 a.m. ET.

Telephone dial-in access information

To access the conference call by telephone, dial 647-427-7450 or 1-888-231-8191. Please connect approximately 10 minutes prior to the beginning of the call to ensure participation. Those participating in the conference call by telephone can view the slide presentation by accessing the on-line webcast and choosing the non-streaming audio option.

Webcast access information

A live webcast of the conference call, including the slide presentation, will be available. Please connect at least 15 minutes prior to the conference call to ensure adequate time for any software download that may be required to join the webcast. To view the webcast presentation with slides, please choose either the Real streaming audio or Windows streaming audio option.

Archive access information

The conference call will be archived for replay by telephone until Monday, June 5, 2017, at midnight. To access the archived conference call, dial 1-855-859-2056 or 416-849-0833 and enter reservation No. 27767344.

About Boyd Group Income Fund

The Boyd Group Income Fund is an unincorporated, open-ended mutual fund trust created for the purposes of acquiring and holding certain investments, including a majority interest in The Boyd Group Inc. and its subsidiaries.

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