Brad Mewes, principal of Supplement Advisory, a consulting firm in Irvine, Calif., said the deal is great for Caliber, specifically from a geographic standpoint.
"Geographically, this merger is very synergistic," said Mewes. "The majority of Abra's locations were in states in which Caliber previously had no presence. Of the 28 states Abra operated in, Caliber operated in only 10 of those states. Caliber, headquartered near Dallas in Lewisville, Texas, now has beachheads in 18 additional states and now operates in 38 states nationwide."
Big consolidators such as Abra, Caliber, ServiceKing Collision Repair Centers and Boyd Group, have been aggressively competing with dealership-owned shops as the cost of doing business increases. From a competitive standpoint, Mewes said Caliber now has significant market presence in each of the primary markets of its main competitors, ServiceKing and Boyd Group.
"In each state, with the exception of Michigan and a few less populous states, Caliber now has either the most stores or a comparable number of stores relative to its competitors," he said.
Mewes said he was not surprised by the merger, calling it "only a matter of time." The companies merged to take advantage of synergies related to costs, capital and revenue, he said.
"The idea with cost synergies is that when you take a company like Caliber or AutoNation, for example, and they acquire a dealership, they minimize the high costs of hiring a CEO and other corporate positions because they already have them in place at their corporate function. This eliminates some of these high costs without having to add any costs at the same time, which is the idea behind economies of scale."