The Blackstone Group L.P. (BX) yesterday announced the purchase of Alliance Automotive Group, the wholesale distributor of automotive parts in France and the UK, from the French firm Weinberg Capital Partners.
Blackstone did not divulge any financial terms of the agreement. However, according to persons familiar with the deal, the company shelled out around €440 million for acquiring the auto parts dealer.
Weinberg had initially bought Alliance in 2006. Under Weinberg, Alliance focused intently on inorganic expansion, thereby successfully completing more than 30 acquisitions including Précisium Group and TPA. Consequently, Alliance’s revenues soared to €1.2 billion in 2013 from €540 million in 2006.
Alliance functions under various brands such as Groupauto France, Groupauto UK, Partners, Gef’Auto and Précisium. Moreover, the firm uses its own subsidiaries and independent retailers for auto parts buying and distribution and employs 3,500 people across 1,500 outlets.
Further, as mentioned in Blackstone’s statement, Alliance issued a €185 million private bond in last November, syndicated to a small group of institutional investors.
Blackstone’s Benefits from the Deal
With this deal, Blackstone hopes to further enhance Alliance’s expertise, given the latter’s successful track record of organic as well as external growth strategies, which has made it a leading auto parts operator in the European market.
This is Blackstone’s second investment in Europe after it acquired 20% stake of the Italian fashion house Gianni Versace SpA for around $287 million in February this year. These investment activities by Blackstone in the recovering European market will likely be accretive for the company going forward.
Benefits for Alliance Automotive
Alliance is well positioned to take advantage of Blackstone’s international footprint to further accelerate its growth. Moreover, the reviving automotive market in Europe will further support the company’s in-place development policies.
Our Take
Blackstone is making investments in the European market which is showing signs of recovery after a long period of sluggish growth. This could turn out to be favorable for the company in the future. However, whether the European car market is able to sustain its recent growth story is yet to be seen.
Currently, Blackstone carries a Zacks Rank #2 (Buy). Some better-ranked finance stocks include AllianceBernstein Holding L.P. (AB), Cohen & Steers Inc. (CNS) and SEI Investments Co. (SEIC). All these stocks hold a Zacks Rank #1 (Strong Buy).
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