Within the weeks leading up to press time, the company had purchased Consumer Auto Parts, Inc., in Massachusetts, and Parts Distributors/Parts Holding LLC in New Jersey, raising its U.S. profile and cornering a large percentage of the national do-it-for-me (DIFM) market.
"Acquisitions are a way for Uni-Select to grow its business," says Jacques Landreville, the company's president and CEO. "The organic growth of a business is a long and difficult road, so we prefer to make mergers, acquisitions, alliances, affiliations and partnerships our top priority."
According to Landreville, the purchase of Consumer Auto Parts will allow Uni-Select's jobbers to experience consumer sales development in the future, as the newly-acquired company is very much involved with the retail, as well as the wholesale, aspect of the automotive industry. The acquisition of Parts Distributors will allow Uni-Select to develop its fleet segment within the U.S. and to supply MRO (maintenance, repair and overall) to its national fleet accounts.
Rick Levy, president of Parts Distributors, LLC, previously commented on Uni-Select's acquisition of his company in a statement to the media. "From its inception, Parts Holding, LLC and Parts Distributors, LLC have enjoyed strong and steady growth," Levy says in a press release issued by Uni-Select and distributed through Marketwire. "As part of the Uni-Select network, we will have the ability to better serve our traditional customers and will have the tools to pursue our expansion of sales to fleet customers."Parts Distributors is an automotive replacement parts distributor that operates 16 stores and one distribution center in New Jersey, New York, Pennsylvania, Virginia and Maryland. Consumer Auto Parts is an automotive replacement parts and accessories distributor and operator of 23 stores and one distribution center in Massachusetts, with a sales mix of 55 percent wholesale and 45 percent retail, according to Merrill Cohen, president of Consumer Auto Parts. He sees the acquisition of his company as an opportunity for it to expand.
"With the power of a $1 billion company behind us, we feel there's an opportunity to expand into cities that we haven't been able to expand into before this," he says. "The benefit to Uni-Select in this deal is CAP's success and knowledge on how to blend the retail into the wholesale, therefore capturing both sides of the market."
According to Landreville, Uni-Select tries to do three types of acquisitions. The first is tuck-ins, or stores and WDs that will increase the company's asset utilization in territories it already has penetrated. The second is new footprint purchases, which are made in new territories it intends to penetrate to develop their two- and three-step business models; while the third is growing engines, or acquisitions that allow the company to provide its existing stores with a new source of supply or a new type of customer for its jobber base, thereby increasing national penetration.
Dan Smith, president of the Capstone Financial Group, does not see this trend of mergers and acquisitions slowing down any time soon.
"The DIFM market is growing much faster than the DIY market because the demographics are perfect," he says. "The population is growing, there are more registered vehicles on the road and people are holding on to their vehicles longer. Companies like Uni-Select are doing a great job of acquiring DIFM business in key territories."
He also notes that the DIFM market is providing tremendous opportunities for some distributors.
"It's really a wonderful time if you are a regional distributor focusing on the DIFM market," Smith offers. "It's hard for these acquisitions to not increase a company's earnings if the deals are structured correctly. It's a great strategy, and Uni-Select has done an awesome job with it."
Since 2004, Uni-Select has completed the acquisition of approximately 12 companies in the United States, including Tier Parts, Parts Plus and Hallstead Auto Parts of New York; Red Rooster Auto Stores of Minnesota; South Austin Auto Supply, Inc. and Earl Bristo Company of Texas; Auto Friend, Inc. of Georgia; Plano Auto Supply & Machine, Inc. of Texas; Markauto Parts, Inc. of New York; Thompson & Co., Inc. of New Jersey; MGT, Inc. of Pennsylvania; Consumer Auto Parts of Massachusetts; and Parts Distributors/Parts Holding, LLC of New Jersey.
Since adopting this proactive business model, Uni-Select has seen its profits rise exponentially. In fact, the company recently reported a 10.8 percent increase in net earnings for second quarter 2007, reaching nearly $11.7 million, compared to $10.5 million during the same period in 2006. Sales reached $313 million during second quarter 2007, which is an increase of 7.6 percent over sales of $291 million in second quarter 2006. Landreville predicts that when all is said and done, the company will have done more than $700 million in sales for fiscal year 2007.
"We're in business forever," Landreville says of Uni-Select's aggressive strategies and its plan to continue business in the same manner. But, he cautions, "the challenge is not only to acquire, but to integrate our acquisitions properly. That's what will make us successful."
