Blackstone Group has agreed to buy a majority stake in Service King Collision Repair Centers from the Carlyle Group with a view to fund the company’s future growth, according to sources familiar with the matter. The Wall Street Journal reported Tuesday the deal values Service King at about $650 million, citing a person familiar with the matter.
Carlyle will recognize a return of nearly four times its initial investment from the sale and will retain a significant minority stake in Service King, whose management will increase its own minority stake as part of the deal, sources said.
Washington, D.C.-based Carlyle acquired a majority stake in Service King in August 2012, with plans to expand the company nationally. At the time, the Richardson, Texas-based company operated 49 collision repair shops in or near Texas’s major cities. The company, which traces its roots to 1976 when its founder Eddie Lennox took out a $10,000 loan and repaired vehicles from his own garage, now operates 177 centers across 20 states.
Blackstone’s investment in the company comes as another private-equity-backed collision repair chain is on the auction block. Palladium Equity Partners LLC has hired an investment bank to sell ABRA Auto Body & Glass, which could fetch $500 million or more, sources familiar with the matter said last month.
The move underscores Blackstone’s pursuit of smaller, high-growth deals as steep market valuations make traditional buyout deals more expensive. As of the end of the second quarter, the firm had $17.7 billion available to spend on private-equity investments.