San Diego Private Equity Firm to Acquire Earl Scheib

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Earl Scheib Inc. said Wednesday it entered into a definitive merger agreement that allows Kelly Capital LLC to acquire the chain of automotive paint and collision repair shops in a deal valued at $8 million.

The Sherman Oaks company, founded 1937 and with most of its stores in the Western United States, said the $2 per share in cash deal represents a 567 percent premium to the 30 cents per share closing price Wednesday on the Pink Sheets.

Kelly Capital is a San Diego private equity fund founded in 1993 that has completed more $3 billion in transactions as principal investors. If the deal is approved by Earl Scheib stockholders, the transaction is expected to close by April 15, the company said.

Earl Scheib is considered the oldest and largest non-franchised operator in the automotive painting industry, with 85 stores in 77 cities. The company last March hired Wedbush Morgan Securities as a financial advisor to begin exploring strategic alternatives.

“It is our firm belief that this transaction provides the best possible alternative for our stockholders, while at the same time preserving the Earl Scheib name and operation,” said Chief Executive Christian K. Bement in a statement. “Despite the continuing unprecedented turbulent economic climate, our belief in the strength of the Earl Scheib name has never wavered. By entering into this transaction with Kelly Capital, we continue to look ahead to the future.”

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