Boyd Group will fund the acquisition through a combination of cash, Fund units, supplier loans and a five-year note held by the Globe-Amerada Glass Company. Annual revenues for the Globe Network were approximately $12.5 million for 2004. The acquisition is expected to make an immediate positive contribution to the Fund's distributable cash.
"This acquisition is an excellent strategic fit for us and represents a significant opportunity to increase our distributable cash going forward. We plan to integrate the Globe Network into our U.S. based Gerber Collision & Glass head office to realize cost synergies, while leveraging our strategic industry relationships to drive future growth," said Terry Smith, President and CEO of the Boyd Group. "We view auto glass repair and replacement services as a complementary growth driver for our business. Though we provide auto glass repair and replacement services in our Canadian locations as well as our Gerber Collision & Glass facilities in Illinois, we do not currently offer auto glass services in the balance of our U.S. locations. Through the Globe Network, we will refer network repairs to Boyd Group facilities, thereby providing us with an opportunity to quickly and profitably introduce auto glass repair and replacement services to the balance of our U.S. locations."
Founded in 1976, the Globe Network is the oldest auto glass repair and replacement referral network in the U.S. Utilizing a company owned and operated call centre located in Chicago, Illinois, the Globe Network facilitates auto glass repair and replacement services across the U.S. through a network of independently owned businesses comprised of approximately 7,000 locations nationwide. The Globe Network targets insurance companies and the commercial (fleet leasing) segment of the auto glass industry.
The U.S. auto glass repair industry generates approximately $5.0 billion in annual revenue. The industry is comprised of three major customer segments: i) automobile insurance; ii) commercial; and iii) consumer. Automobile insurance accounts for approximately 75% of the industry's total revenue and the majority of this segment's revenues come through network referrals.
Senior management of the Globe Network, including Mr. John Kellman, President, and Mr. Michael Kellman, Senior Vice President, have been retained by the Boyd Group to manage the Globe Network's activities and will report directly to Mr. Eddie Cheskis, CEO of Boyd Group's Gerber Collision & Glass division. Mr. Cheskis, who has extensive business experience in the auto glass repair industry, is the former President of the USA Glass Network.
"This acquisition provides us with tremendous upside," said Eddie Cheskis, CEO of Gerber Collision & Glass. "Combining the Globe Network's track record of outstanding customer service with Boyd and Gerber's strength in providing insurance companies with superior collision repair claims management solutions, post acquisition, we will embark on a focused growth plan, with a mandate to significantly grow the Globe Network's share of market."
Gerber Collision & Glass, which has been dedicated to a philosophy of providing quality repairs and service to insurance companies and their customers since 1937, was acquired by Boyd Group in February 2004. In the second quarter of 2004, Boyd Group initiated the roll-out of Gerber Collision & Glass as its brand for all of its collision repair centres in the U.S. As Boyd Group continues to expand its network of Gerber Collision & Glass repair facilities in select regions throughout the U.S., it intends to grow its auto glass repair business proportionately.