The Boyd Group has acquired a 16-outlet northern Illinois collision repair chain, making it the largest chain of its kind in North America by number of locations.

The purchase of the Gerber Group chain in the Chicago area gives the Winnipeg-based collision repair company 81 corporate-owned locations as well as 11 franchised outlets. The new stores will add about $70 million in sales to Boyd's total, giving it about $200 million in annual sales.

As of May 2003, ABRA Auto Body and Glass, based in Minneapolis, had 78 locations in 10 U.S. states, and Caliber Collision Centers, based in Irvine, Tex., had 68 locations in California and Texas. The two are among the largest operators in North America and both are privately owned. Caliber has publicly said its sales are more than $200 million US. Boyd is the largest player in its industry in Canada.

 This is a very, very significant transaction for us,  Boyd CEO Terry Smith said yesterday.  It is really a continuation of our strategy of growing the business from the top and bottom line (gross sales and profits) through strategic acquisitions of best-in-class assets. We judge the Gerber group to be a tremendous addition to us. 

Terms of the acquisition were not disclosed, but Smith said Boyd will finance the deal with a combination of several different financial mechanisms. They include a previously announced private placement of equity that raised about $14 million, a forgivable-loan arrangement with paint supplier BASF that it continues to draw on, a new $15-million loan agreement with a supplier, whose identity the company will not disclose, and a vendor note that is part of the deal that is convertible into Boyd Group Income Fund units at either the vendor's or Boyd's discretion.

 This is truly a great fit,  Gerber CEO Eddie Cheskis said in a conference call with analysts yesterday.  Gerber's management shares the same views as Boyd's management. We believe there is tremendous opportunity to create value in the auto collision repair business. 

Boyd already owns two other shops in the northern Illinois market, considered the second-largest regional market in the collision repair business after Los Angeles.

According to company officials, Gerber has long-standing and preferential relationships with several large U.S. auto insurance companies, including All State Insurance, Farmer Consolidated and State Farm Insurance. Boyd's strategy in the U.S. has been to acquire shops that have particularly close relationships with U.S. automobile insurance companies.

The Gerber Group already has two other locations in development and its strategic plan called for growth of between four to six new locations a year during the next five years, with the potential to develop up to 30 new locations in the area.

 That was the company's strategic plan, but it did not necessarily have the capital in place for that type of growth,  Smith said.  Now it does. 

The Boyd Group has been steadily growing its business in the fragmented North American collision repair industry, which was recently estimated to generate about $50 billion in annual sales.

Boyd's recent $14-million private placement of subscription receipts included one trust unit and one warrant for half of another trust that can be purchased over the next three years at a price of $10. Boyd units closed down 26 cents yesterday to $9.99.

martin.cash@freepress.mb.ca