"This acquisition will provide us with a new market entry into the California retail oriented recycled parts market and additional capacity to grow our Southern California wholesale recycling business," said Joe Holsten, President and Chief Executive Officer.
"During our evaluation of Pick-Your-Part, we were very impressed by its operations and employees, and are excited to have this opportunity to add them to LKQ Corporation's business."
Pick-Your-Part Auto Wrecking has five retail oriented recycled parts facilities in the Greater Los Angeles area (one of which also operates a wholesale business), two in the San Francisco Bay area, one in the Bakersfield area and one in the Greater San Diego area. The nine locations operate on approximately 174 total combined acres of property. After the closing of the transaction, five of the locations will be leased from entities controlled by the current owners of Pick-Your-Part. Members of Pick-Your-Part's current management team plan to remain with Pick-Your-Part under LKQ's ownership.
The purchase price for all of the outstanding voting and non-voting stock of Pick-Your-Part is expected to be $72.9 million, subject to adjustments related to working capital at closing, with the majority of the price allocated to the non-voting stock. We have an option to pay up to 60% of the purchase price with LKQ Corporation common stock. Assuming (i) the transaction closes prior to the middle of September 2008, (ii) 60% of the purchase price is paid with our common stock and (iii) our stock price remains at its current level, we estimate this acquisition will be approximately $0.01 accretive to our total diluted earnings per share in 2008.
We estimate that this business will require approximately $1.3 million in capital expenditures after closing during the balance of 2008.
LKQ Corporation is the largest nationwide provider of aftermarket collision replacement products, recycled OEM products and refurbished OEM collision replacement products such as wheels, bumper covers and lights used to repair light vehicles. LKQ operates approximately 300 facilities offering its customers a broad range of replacement systems, components, and parts to repair light vehicles and trucks.