Vehicle salvage and dismantling business acquired for £225m

IAA Inc, a global digital marketplace connecting vehicle buyers and sellers, has struck a £225m deal to acquire the stock of Doncaster-headquartered SYNETIQ Ltd, a salvage and vehicle dismantling company.

IAA Inc will acquire the stock of SYNETIQ through its indirect wholly owned subsidiary IAA International Holdings Limited.

Founded in 2019 from the merger of four entities, SYNETIQ provides salvage auction services for insurance companies, accident management companies, and other public and private sellers.

In addition, the company is a seller of reusable parts that are dismantled from salvage vehicles and reissued into the automotive supply chain.

SYNETIQ has 14 locations and approximately 500 employees throughout the United Kingdom.

For the 12 months ended September 30, 2021, the business generated revenue of approximately £154m.

John Kett, chief executive officer and president of IAA, said: “We are very excited about the acquisition of SYNETIQ.

“This transaction significantly expands our business in the United Kingdom from both a scale and portfolio perspective, supporting the overall IAA growth strategy.

“SYNETIQ’s management team and employees have done a tremendous job of using innovation to maximise value for their customers.

“We also know reusable parts are increasingly of interest to UK insurers as they look to satisfy customer needs and meet their environmental goals.

“SYNETIQ’s focus and expertise in this area is a true differentiator that is consistent with our focus on sustainability in the UK market and beyond.”

Tom Rumboll, chief executive officer of SYNETIQ, added: “We are delighted and proud that IAA has recognised the great work the SYNETIQ team is delivering to change the vehicle recycling industry, and deliver optimised financial and environmental returns for our clients.

“Now we are presented a fantastic opportunity for continued growth supported by IAA’s global footprint, robust marketplace and innovation.

“From the proud and rich history of the businesses that formed SYNETIQ to what our team has achieved since, this is another milestone moment and the start of the next phase of an exciting future for our business.”

Under the terms of the agreement, IAA will pay £186m at closing, with the remaining £39m contingent upon receipt of the merger control approval from the UK Competition and Markets Authority.

The final consideration to be paid is subject to working capital and other adjustments.

The transaction will be financed through a combination of existing balance sheet cash and existing credit facilities.

Closing of the deal is expected to occur by the end of October 2021. IAA and SYNETIQ will continue to operate independently in the market until clearance of the transaction is obtained from the CMA.

XMS Capital Partners, LLC is serving as financial advisor to IAA, O’Melveny & Myers LLP and Walker Morris LLP are serving as IAA’s legal advisors, and Deloitte LLP is serving as accounting and tax advisor.

EY is serving as exclusive financial advisor to SYNETIQ, and KPMG Law and Euclid Law are serving as their legal advisors.

Matt Eves, a partner in EY’s Strategy and Transaction team in the South West, said: “We’re really pleased to have advised the shareholders of SYNETIQ on its sale to IAA.

“This was a complex deal involving a unique business, which gathered a lot of interest.

“It was a strong team effort to bring the deal to a successful conclusion. The transaction secures a must-have asset for IAA and provides opportunities to expand on its already impressive international footprint, as well as enabling new markets.”