LKQ affirms $48-per-share price for Keystone as final offer

By Angela McDaniels

Seattle, Oct. 5 - LKQ Corp. announced on Friday that it will not raise its $48-per-share offer for Keystone Automotive Industries, Inc.

The per-share price is a 50% premium over Keystone's trading price immediately before discussions began, and Keystone financial adviser JPMorgan has said the price is fair to Keystone shareholders, acording to an LKQ news release.

"The negotiations with Keystone leading up to execution of the merger agreement lasted more than four months. During that time, Keystone's board pursued alternative buyers and convinced us to raise our price five times," Joseph M. Holsten, president and chief executive officer of LKQ, said in the release.

"The unique strategic fit of LKQ and Keystone allowed LKQ to offer a substantial premium to acquire Keystone that we believe no other buyer can match. The transaction has been public for over 75 days, and no other offers, nor any indications of interest, have materialized," Holsten stated.

"We are not going to raise the price. Moreover, the terms of our credit commitment do not permit any increase to the purchase price.

"LKQ recently completed an equity offering in which we raised approximately $350 million of net proceeds to help fund the Keystone acquisition. While we would be disappointed if the Keystone shareholders ultimately decided to reject the merger, in the event that it is not approved, we intend to use the proceeds and the amount available under our existing credit facility to, among other things, expand our network of aftermarket facilities to complement our recycling operations," Holsten added.

A special meeting of Keystone shareholders is scheduled for Wednesday. Assuming approval by the Keystone shareholders, the acquisition is slated to close on Oct. 12.

It was previously reported that investor Rockhampton Management U.K. LLP plans to vote against the merger. Rockhampton believes the offer price "significantly undervalues" Keystone.

Keystone, based in Pomona, Calif., distributes automotive body parts, bumpers and remanufactured alloy wheels to collision repair shops.

Chicago-based LKQ provides recycled light vehicle original equipment manufacturer products and aftermarket collision replacement products.

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