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Letter to the Editor

This article originally appeared in the August 2007 Issue of INSIGHT

A Key Acquisition

The big news in July has been recycled parts giant LKQ Corporation’s acquisition of aftermarket parts giant Keystone Automotive Industries. Keystone has been a company in which I have been keenly interested for many years, and has been a fascinating operation to watch.

Charlie Hogarty, who not too very long ago retired from Keystone’s presidency, steered the company through both smooth and choppy financial waters. I devoted many paragraphs throughout the years to the Keystone saga.

I have made some money (a bit), when Keystone became a “lean” distributor long before “lean” was discussed as a business concept. Of course, I have also lost some money (a good deal more) when the State Farm aftermarket parts decision was handed down that sent Keystone stock plummeting a few years back. I hung doggedly onto my Keystone shares, and was glad I did as I watched the company stock price begin to rise again.

Keystone president Rick Keister has probably made his company’s stockholders a very nice deal indeed, based on LKQ’s offer of $48 per share. Combined businesses will be very interesting to watch in the last quarter of 2007.

I am pleased to note that Wall Street’s Parts and Equipment Index, at 285, has continued to rise, up an astounding 34 percent this month from its initial 212 point in January. This is certainly reassuring, considering the steeply rising costs of raw materials and shipping this year.

The Boyd Group has rebounded very nicely in this second half of the year, nearly doubling its tiny $1.20 Cdn January price per share. A teasing press release in early July from the North American collision repair facility consolidator hinted at nearly-completed negotiations with several insurers, promising lots of new collision repair and replacement glass work. Hopefully, I will know more for next month.

July was a great month at the Stock Exchange for our refinish paint manufacturers. Akzo Nobel, still in negotiations trying to acquire ICI in the UK, posted a per share stock price of $87.66, up almost 42 percent YTD. BASF, at nearly $137 per share, was up over 38 percent. PPG was up almost 23 percent on Wall Street. DuPont, Sherwin-Williams, and Valspar posted under ten percent per share increases YTD.

Note that United Auto Group has changed its name to the Penske Automotive Group. The name change, however, did not impress Wall Street. The huge car dealership entity’s per share price was down over eight percent YTD. CarMax was off a hair this month. too. Sonic Automotive and AutoNation were both up a hair, but at least slightly up.

Auto insurers still have the blahs as far as their showing in the Stock Market this month. Our winner in July is Safeco, up just a nickel per share YTD.

-Charles Baker-

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