There may be a few bumps in the road before the acquisition of local auto parts manufacturer Keystone Automotive Industries Inc. can be completed.
Despite unanimous approval by Keystone’s board, a number of shareholders have begun to voice their disapproval after LKQ Corp., a Chicago auto parts recycler, announced this month plans to acquire Keystone, a Pomona aftermarket auto parts supplier, for $811 million.
In a letter to Keystone Chairman Ronald Foster, a representative of shareholders with over 600,000 Keystone shares said he intends to vote against the deal because the financial terms of the acquisition were not favorable to the company’s shareholders.
“I am writing to express my shock and dismay at the entirely inadequate price you and the Keystone Automotive board have unanimously decided to accept for the acquisition of Keystone by LKQ Corporation,” wrote Saul Rubin, portfolio manager of Rockhampton Management UK LLP, in the letter.
On behalf of its clients, Rockhampton controls 664,825 shares, or 4 percent, of Keystone.
Keystone accepted LKQ’s buyout offer of $48 per share a 10 percent premium over the opening price on July 17, the day the deal was announced but Rubin said no offer below $75 per share would be acceptable. He said the price accepted by the board was a blow to shareholders, who received a much lower bump in stock price than is typically seen by acquired companies.
Three analysts who track the company have downgraded Keystone’s stock since the deal was announced, saying the price has approached their long-term estimates. But at least one of those analysts believes $75 per share is unreasonable.
“There’s no way that’s going to happen,” said Gary Prestopino, an analyst with Barrington Research Associates Inc. “I think $75 a share is way off base. At $48 a share you’re paying a little bit less than 14 times EBITDA. That’s a very fair price for Keystone.”
The deal is expected to close in the beginning of the fourth quarter.
Anti-Terrorism Devices
Some companies increase their stature gradually, through years of slow growth. Cal Pipe Manufacturing did it practically overnight.
As a result of a recent acquisition, the conduit and security device maker, a subsidiary of Downey-based Industrial Recovery Group, announced last week that it has been awarded the State Department’s highest rating for a line of its fixed and retractable steel bollards.
Cal Pipe received the prestigious K-12 rating for its recently acquired PDT 1200 series bollards, strong steel pipes which prevent vehicles from entering specified areas. The devices are commonly placed around embassies and other high-security locations to prevent terrorist attacks.
Rob Reiter, national sales manager for Cal Pipe, said acquisition will give the company a broader range of products and make it a more significant player within the $150 million bollard industry.
“We now can defend everything from the White House to an outhouse,” he said.
The company, which had not previously manufactured bollards strong enough to earn the stringent K-12 rating, gained the product line through its recent acquisition of Perimeter Defense Technologies, a Midland, Tex., bollard manufacturer. Ordinarily, Reiter said, testing to achieve a K-12 rating can run as high as $200,000.
Reiter said the company, which is approaching $20 million in sales across all of its divisions, expects to see a 30 percent jump in bollard sales this year as a result of the acquisition.
The PDT 1200 devices can be raised or lowered in under two seconds and are rated to withstand a 50 mile per hour crash from a 15,000 pound vehicle.
Reiter said in addition to protection from intended acts of terrorism, the devices are becoming increasingly popular in guarding against unintentional destruction caused by unsafe driving, like the 2003 incident in which an 86-year-old man killed 10 people when he lost control of his car and drove through a Santa Monica farmer’s market.
Teledyne Contract
The Air Force is betting that Thousand Oaks-based Teledyne Technologies Inc. can help them see the light.
The aerospace and electronics company’s imaging subsidiary, Teledyne Scientific & Imaging, announced last week it was awarded a five-year $15 million contract to develop infrared sensor technology for the Air Force Research Laboratory.
The company will develop the technology for use in future missile defense systems under the research laboratory’s High Stare program.
Teledyne Chief Executive Robert Mehrabian said the program was a natural fit for the company, which has experience developing imaging technology for space defense systems, including so-called focal plane arrays.
New Materials Leader
Pasadena label and office product maker Avery Dennison Corp. announced this month it has named a new group vice president for its Specialty Materials and Converting department.
Timothy Clyde, who assumed the post July 16, will have responsibility over five different divisions, including Graphics and Reflective Products, Specialty Tape and Performance Polymers.
Staff reporter Richard Clough can be reached at (323) 549-5225, ext. 251, or at [email protected].
