Transamerican Auto Parts is shifting into high gear after revving its way out of financial turmoil.
The Compton-based seller of auto parts for trucks and Jeeps has agreed to be acquired by Polaris Industries Inc. for $665 million in an all-cash deal set to close by the end of the year.
“It’s the culmination of a successful turnaround,” said Kenneth Cleveland, Transamerican’s chairman. “It’ll be just tremendous for the company.”
The deal marks the largest acquisition for Polaris, a publicly traded company based in Minneapolis that sells all-terrain vehicles, accessories, and parts. The company raked in $4.7 billion in revenue last year and had second-quarter net income of $71.2 million on sales of $1.13 billion.
Transamerican, a private company also known as TAP, is small in comparison, having done $470 million in sales over the last 12 months. However, it claims to be the largest in its niche for aftermarket parts and accessories, appealing to enthusiasts of off-roading and four-wheel-drive customization. Polaris draws the bulk of its sales from off-road vehicles and snowmobiles.
Transamerican operates 75 retail locations across the country, mostly in the South and Southwest. Of its 1,700 employees, about 500 work in or around Los Angeles.
A Polaris representative said the headquarters will remain in Compton, where Transamerican leases a 254,000-square-foot building.
The sale comes after a rough patch in Transamerican’s 55-year history. Private equity group Bear Stearns Merchant Banking, now known as Irving Place Capital, purchased the company in 2005 for a reported $135 million in a deal Cleveland said loaded the company with debt. The company struggled to pay back a loan and ownership transferred to banks and lenders – right at the start of the Great Recession.
“It particularly hit the automobile sector hard,” Cleveland said. “We went from a very profitable company into a company losing money and burning cash.”
Transamerican in 2008 tapped Cleveland, a crisis management expert based in Malibu for consulting firm BCI, to join the board and spearhead a financial fix. BCI did not take an equity position in the company. Transamerican reorganized its finances to clear debt and pay off lenders, and closed some underperforming stores.