Toronto, Ontario — June 26, 2018 — An interesting bit of new this week comes from the land down under, where the race to consolidate the Australian collision repair sector has just taken an unexpected turn—a turn that may benefit Quebec-based Fix Auto.
As previously reported in Collision Repair magazine, major Australian aftermarket auto repair chain AMA Group was set spin off its collision repair stores into a standalone company. Once the spin-off was complete, it was thought that the chain of collision repair shops would be picked up by major North American private equity firm Blackstone Group.
Blackstone, of course, is a massive New York-based private equity firm. The company manages private equity, hedge and credit funds for wealthy clients. It has a massive $434 billion under management. The firm is run by the sometimes controversial Stephen Shwarzman, who is said to control a personal fortune of $12.5 billion. That puts Sharwzman at number 113 on the Forbes list of world billionaires. When he held his 60th birthday party in New York in 2007 Colin Powell, Michael Bloomberg and Donald Trump showed up. Rod Stewart was paid $1 million to perform for half an hour.
But Blackstone also controls Service King, the Texas-based collision repairer that is busy consolidating the North American collision repair industry. Service King is sometimes called one of the Four Horsemen of consolidation, along with Boyd, ABRA and Calibre.
It seems Blackstone was also interested in taking its consolidation play to Australia. Several weeks back it was reported that the head of Australia’s AMA Group, Ray Malone, was ready to sell the spun-off collision repair shops to Service King in a major deal worth AUD $508 million.
The deal would have been another feather in the hat for AMA CEO, Ray Malone. Some months back Collision Repair magazine interviewed industry analyst Bradley Mewes, who had nothing but good things to say about AMA Group at the time. “They’re on a tear. The head of the company, Ray Malone, is just an incredibly sharp individual. He’s taken a page out of what’s going on in the rest of the world. But they’re doing a great job. They’ve done in a compressed time what has been going on in North America for years,” said Mewes.
So no wonder the interest on the part of Service King in making a deal with Malone for the collision repair side of his business. Through that acquisition Service King would take a bit step into a large market with one deal. So how come it has yet to close?
News emerged Tuesday night that the AMA-Service King deal has been squashed. A news report from down under notes that AMA announced to investors late last week that it had called off plans to sell its collision business to Blackstone, putting Service King up on blocks in terms of its plans for Australia.
What happened? It seems the government stepped in to prevent the takeover. It is being reported that the Australian deputy commission of taxation wouldn’t grant what is called a “Ruling for Demerger Relief.” Without a favourable tax ruling being sought by AMA Group it seems Malone changed his mind, and is not going to split the company after all.
For Blackstone it seems any foray into Australia will have to be shop-by-shop, or acquisitions of MSOs. The winner in this might be Canada-based consolidator Fix Automotive.
The company has of late been hustling to consolidate collision repairers in Australia. The CEO of Fix, Steve Leal, has traveled to Australia in the last year to meet with shop owners who might interested in joining the Fix team. Now that one of the world’s largest private equity funds has been stymied in its bid to acquire the single largest chain in the country, one has to imagine the Fix Auto team is quietly pleased.
