The Blackstone Group and the Carlyle Group are two titans of global finance, with extensive businesses in private equity, hedge funds and real estate.
They also seem to have a passion for auto body shops.
Blackstone announced Tuesday evening that it would buy a majority stake in an auto repair chain, Service King Collision Repair Centers, from Carlyle, which took over the business two years ago. Terms of the deal were not disclosed, but people briefed on the matter who were not authorized to speak publicly said it valued Service King’s equity at roughly $700 million. Including debt, the company was valued at about $1 billion.
The deal was structured so that Carlyle, which bought a majority stake in Service King in August 2012, can retain a significant minority stake in the business. Members of the company’s management will also continue to be shareholders.
Blackstone’s interest in repairing damaged vehicles is no lark. Last year, the firm considered buying another auto repair chain, Caliber Bodyworks, people briefed on the matter said. Around that time, Peter Wallace, a senior managing director at Blackstone, called his old friend David Stonehill, a managing director at Carlyle who years earlier had worked at Blackstone. Mr. Wallace was seeking some insight on the auto body industry.
Caliber Bodyworks was ultimately sold to another firm. But Blackstone remained interested in the industry, and Mr. Wallace and Mr. Stonehill remained in touch. This spring, after Service King bought Sterling Collision Centers, a chain of 62 auto body shops, Blackstone and Carlyle started talking seriously about doing a Service King deal.
Service King, which is based in Dallas, has grown substantially under Carlyle’s ownership, from 47 locations in Texas to 177 locations in 20 states. With the Blackstone deal, Carlyle has recorded a return on its investment of nearly four times, one person briefed on the matter said.
Blackstone plans to continue the strategy of expansion, including by making acquisitions. The goal is to improve customer service and promote trust by creating a national chain.
“Service King’s commitment to its customers and focus on high quality service in collision repair initially attracted us to this investment,” Mr. Stonehill said in a statement. “We welcome Blackstone’s partnership in further strengthening the brand and business.”
Mr. Wallace, in a statement, said Blackstone was “excited to invest in Service King — an industry leader with an unparalleled commitment to its customers and focus on high quality service.”
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