LKQ to sell its self-service segment

LKQ Corp., headquartered in Antioch, Tennessee, has entered into a definitive agreement to sell its self-service segment, Pick Your Part, to an affiliate of Pacific Avenue Capital Partners LLC, Los Angeles, for $410 million, subject to customary postclosing purchase price adjustments. The company, with operations in North America, Europe and Taiwan, offers its customers a range of original equipment manufacturer recycled and aftermarket parts, replacement systems, components, equipment and services to repair and accessorize automobiles, trucks and recreational and performance vehicles. 

The transaction, which resulted from a competitive bid sale process that attracted interest from several parties, is expected to be completed during the fourth quarter of this year, subject to the satisfaction of customary closing conditions, including receipt of required regulatory approval.

The net proceeds from the sale will be used to strengthen LKQ’s balance sheet through debt repayment.

Pick Your Part operates 61 self-service salvage yards in 17 U.S. states, making it one of the largest networks of self-service salvage yards.

During LKQ’s latest earnings call with analysts, President and CEO Justin Jude signaled the company was considering a sale of some of its business units to “further accelerate [LKQ’s] simplification strategy and capital allocation priorities."

Related: LKQ posts slight increase in net income despite lower revenue in Q2

“Today’s announcement marks another important step in our multiyear transformation to simplify our portfolio and become a more focused, high-performing company with leadership positions in our priority segments,” Jude says in the news release about the pending sale. “While Pick Your Part has played a meaningful role in our history, we believe that it no longer aligns with our long-term strategy. As we have said, after having built the company through thoughtful acquisitions over many years, we have reached a point where it makes sense to assess opportunities to simplify and sharpen our focus. We will continue to evaluate opportunities to advance our strategic objectives so that we can best serve customers and create value for our shareholders.”

He adds, “We know the Pick Your Part team will continue to be best-in-class operators under the ownership of Pacific Avenue Capital Partners. We thank all Pick Your Part employees for their efforts and years of service at LKQ and wish them the best.”

Jefferies LLC served as the financial advisor to LKQ, and Wachtell, Lipton, Rosen & Katz served as the legal advisor to LKQ in connection with the transaction.