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PaulGlavactakenbyChrisSmithYou could say the Commercial Vehicle Group was just not trashy enough for Transpacific Industries because it didn’t fit into the core refuse business. However, it sure is a treasure for its potential owners the Penske Automotive Group as it propels itself into the Australian market. Chris Smith reports.

It seems that everyone is a winner in the current sale of the Transpacific Industries (TPI) Commercial Vehicle Group (CVG) to the Penske Automotive Group announced this month (August).
TPI CEO Kevin Campbell announced the $219 million sale would provide an $85 million tax profit for TPI in 2014 with $250 million knocked off its debt and with $12 million saved in annual interest payments alone. Good news for TPI investors.
For the buyers the news is even better because upon closing, the transaction is expected to generate approximately $420-$460 million in estimated annual US dollar-related revenues for Penske Automotive Group – which sounds like a very smart investment.
Closely involved in the deal is Roger Penske himself, at 76 he is a self made billionaire and the Chairman of the Penske Automotive Group (PAG) the second largest publicly traded automotive retailer in the United States. It owns and operates over 160 franchises in the US and 165 internationally representing over 40 brands.
The sale of the Commercial Vehicle Group (CVG) was the first question I put to Transpacific Industries retiring CEO Mr Campbell a month before the official announcement was issued. At that time he maintained he believed the CVG was not a core business to the primarily waste management company, however he said the board hadn’t given its assent to sell it off at that time.
Mr Campbell pointed towards TPI’s founder Terry Peabody’s grand vision to have a fully integrated business to be Australia’s biggest waste management company. He said the company had been on an “acquisition rampage” and basically purchased and parked and integrated the businesses which created a “horrendous cost base” which still plagued the company.
“His vision was, I guess I’m assuming I haven’t discussed it with him, I assume he was going to build the largest waste management company in Australia, which he did and at the time, before the GFC it was riding quite well but the rest of it is history,” pointing to his demise from the top job and the steep fall in the TPI share price.
At the time I also asked Paul Glavac the CEO of Transpacific Commercial Vehicle Group about sale rumours however he later confessed he was bound by confidentiality and could only refer to the company line, “Kevin Campbell has stated publically many times that he and the Board of Directors have decided that CVG is not core to the Waste Management Business and as such keeping their divestment options open. In the mean time I have a business to run and there is where my focus remains,” he had told me then.
How things change in a month and the number crunchers were literally in the boardroom at 72 Formation Drive Wacol, working to finalise the sales process due to be completed by September 30 as I got the now sanctioned update from Mr Glavac. He said the normal typical contractual agreements are being attended to but he sees no reason why they won’t be satisfied.

“To cut to the chase the deal has to be finalised and cheques exchanged, but essentially bring it on and let’s get on with it,” he told Diesel Magazine.

Mr Glavac is excited because it is not just an asset sale. “It is the total business the people the contracts everything, that is an important differentiator,” he said.
This means the essential structure of the business unit will stay the same however the business now becomes a part of a “core” automotive group which according to Mr Glavac is a hit with all the stakeholders involved.

“If you think about the people involved in this you’ve got Transpacific that are happy with the transaction, you’ve got the Penske Automotive Group who are happy with the transaction. If you think about my business you’ve got the OEMs you’ve got us, you’ve got our dealers and you’ve got our customers,” he says.

“We have made contact with everyone involved and the OEMs are delighted. We are delighted from a management group and people point of view because they see the advantages that being a “core” business will bring to what was formerly CVG.

“We’ve spoken to all our dealers and they see it as a very, very positive thing as well.

“And we have spoken to most of our A and B fleet customers and the feedback from every one of those links in the chain is really, really positive,” Mr Glavac was happy to point out.

Mr Glavac points to close synergies with CVG and PAG with a strong focus on human capital.

The initial story I interviewed Mr Campbell and Mr Glavac about was the focus on diversity within TPI.
“From a best practice point of view we will be looking at what PAG is doing, anything that we can pick up from what they are doing, in terms of diversity for women in business etcetera, we can add to what we have already started here,” Mr Glavac explained.

“The programs from Penske dovetail nicely with what we have in place because they are very big on succession planning and promoting from within.”

He also explained the customer focus of PAG will take the Australian business to a totally new level.

“In this organisation we always believed that we were customer focused but this organisation will just seriously bring it to a new level, they are highly professional,” he explained of PAG’s organisation.

Mr Glavac said although it is primarily automotive sales the last acquisition was the second largest Freightliner dealer group in the USA.

“They are expanding into trucks. That’s no surprise to me giving Roger’s background at Detroit Diesel,” he said.

Mr Glavac also pointed to possible future developments for PAG in Australia. He said outside the publically listed company Penske Corporation has a number of private businesses including accessories and components businesses catered towards trucking including truck leasing, truck rental, as well as logistics companies.

“You have Penske Truck Leasing, Truck-Lite, Davco outside of PAG, they are all privately held businesses by Penske and many of them are specifically truck related,” he explained.

Davco specialise in fuel-heater/water separators and filter systems for Class 8 heavy-duty trucks, medium trucks, marine and off-road applications, as well as the makers of industrial automatic oil replenishment systems, with regulators, slow flow meters, and fluid level switches and Truck-Lite which is a major producer of signal lighting, forward lighting, wiring harnesses, mirrors, turn signal switches, and safety accessories to the heavy duty truck, trailer, and commercial vehicle industries.

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