The deputy commissioner of taxation wouldn’t grant the “Ruling for Demerger Relief” sought by the AMA Group.
The AMA Group had planned to sell Blackstone its collision shops but keep its “Automotive Component, Accessory and Procurement Business,” which distributes paint, parts and materials to collision repairers and has interests in automotive remanufacturing, performance products, electrical accessories and protection products as well. This split appears to be the demerger for which AMA sought tax relief.
“This ruling was required in order to undertake the Demerger Scheme of Arrangement and Acquisition Scheme of Arrangement as announced to the market on 13 April 2018,” AMA secretary Terri Bakos wrote on behalf of the board. “The AMA Board is disappointed that the Deputy Commissioner of Taxation has taken a different view as to the requirements for demerger relief as compared with previous transactions, particularly given the advice the Board received from its advisors that demerger relief would be granted.”
AMA has told Blackstone it won’t split the company and will decline to sell. It won’t have to pay “break fees” since a government decision prompted the auto body chain to bag the deal.
“The AMA Board is pleased to advise, however, that despite the distractions of this transaction, the business has continued to perform strongly and is still on target with the market guidance released earlier in the year,” Bakos wrote.
The deal was supposed to have closed in September. Blackstone would have been locked into a 10-year distribution deal with the companies retained by the AMA Group for at least $1 million ($740,000 USD) a year. The deal also guaranteed $12 million ($8.93 USD) of product sourcing fees over three years will come from Blackstone’s new AMA collision business or any other company in its portfolio.
Technically, this could have meant Service King, though it’s difficult to see a scenario where products geared to the Australian automotive and collision market made technological or logistical sense for the North American fleet.
The news comes more than a year after Bloomberg reported Blackstone and Carlyle were interested in selling Service King for as much as $2 billion USD.
AMA Group, Jan. 22, 2018
Featured image: The AMA Group logo is shown. (Provided by the AMA Group)