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Letter to the Editor

This article originally appeared in the July 2007 Issue of INSIGHT

Marking the Mid-Year

Rumors of possible deals and potential acquisitions in the auto paint manufacturing industry have been flying for months without any firm facts settling to the ground for investors and industry watchers.

Finally, in mid-June, Akzo Nobel became the first major player to make a move, making an offer of 7.2 billion pounds to purchase the UK paint powerhouse ICI PLC. The offer was rejected immediately by ICI’s board as too little. As of today Akzo Nobel has not made another move.

It will be interesting to track further developments. Akzo Nobel will certainly have a tidy amount of cash with which to play after the expected sale of the company’s Organon BioSciences subsidiary later this year. The deal should generate about 11 billion euros for Netherlands-based Akzo Nobel, plenty enough to be able to play in just about any buy-sell game anywhere on the planet.

Winners this month in our Collision Repair Industry related chart, besides Akzo Nobel, whose per share stock price jumped over one third to just under $82 due to its acquisition attempt, are BASF, still up nearly 25 percent over January postings, and Keystone Automotive Industries, at just over $42 per share, a 22 percent increase since the beginning of 2007.

Our INSIGHT supplier index, up nearly eight percent YTD, again out-performed our industry related insurers this month. Insurers are pretty much at the point from which they started so far this year.

Of our auto dealer groups in our stock chart, AutoNation and Sonic Automotive posted positive improvement in their per share stock prices. Autonation is up almost six percent YTD to $22.55 per share, and Sonic Automotive, at just over $30, is up almost three percent.

CarMax, despite reporting improved revenue and a 15 percent jump in revenue in its First Quarter, was lackluster on Wall Street this month. CarMax’s per share stock price was down over 13 percent YTD to $23.27. The United Auto Group share price was off a bit over ten percent its January $23.59 posting to just over $21 in June.

The Boyd Group is still performing much better this month at the Toronto Stock Exchange, despite a bumpy month for the Canadian Stock Market. The body shop consolidator’s per share stock price is up over 66 percent from its New Year’s low of $1.20 Cdn.

Solera Holdings, our newest entry in our Industry Stock Report at the NYSE is staying pretty steady again this month at $18.47 for one share, up a hair from May’s figure.

I am pleased to note that Wall Street’s Parts and Equipment Index, at 267, has risen nearly 26 percent this year from its initial 212 point. This is certainly reassuring, considering the steeply rising costs of raw materials and shipping this year.

Overall, the first half of 2007 on Wall Street has not given me any more white hair than I already have!

-Charles Baker-

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