Advance Auto Parts to buy rival General Parts International for $2 bn
17 October 2013
Advance Auto Parts yesterday agreed to buy its rival General Parts International, for $2.04 billion in cash in order to create North America's largest after-market auto parts retailer.
The deal will create a company with annual sales of more than $9.2 billion, comparable in size to the current market leader, AutoZone Inc.
Founded in 1961 by chairman and CEO Temple Sloan Jr, Raleigh, North Carolina-based General Parts International is a leading distributor and retailer of replacement parts, supplies, tools and equipment for automobiles, light and heavy trucks, off-road equipment, buses, recreational equipment, and agricultural equipment.
It operates the Carquest auto parts distribution network, with 38 distribution centers, 1,246 company operated stores across the US and Canada and 1,418 independently owned.
It also operates Worldpac, a leading importer and distributor of original equipment and quality aftermarket replacement automotive parts to import specialists in North America and Puerto Rico operating four main distribution centers and 102 facilities across the US and Canada.
Founded in 1932 by Arthur Taubman and based in Virginia, Advance Auto Parts is a leading automotive aftermarket retailer of parts, accessories, batteries, and maintenance items, in the US. It serves both the do-it-yourself and professional installer markets.
The company operates over 3,900 stores in 39 states, Puerto Rico, and the Virgin Islands and employs over 55,000 people.
Advance said that the transaction will generate about $160 million in annual cost savings within three years after closing. It is also expected to add 20 per cent to the company's cash earnings per share for the 2014 fiscal year.
It plans to fund the acquisition through a combination of bank debt, senior notes and cash on hand.
Temple Sloan will continue as president of General Parts and report to Darren Jackson, CEO of Advance Auto and will join the Advance Auto Parts board of directors.
The combined company will be headquartered in Roanoke, Virginia and will continue to maintain a presence in Raleigh, North Carolina.
Jackson said, ''This transformational transaction provides a compelling strategic opportunity for Advance to expand our geographic presence and commercial capabilities to better serve customers. We believe the combination of the two companies is a great fit and the synergy of General Parts' assets with our capabilities will allow us to capitalise on market opportunities that will create value for our shareholders and provide even better service to our customers.''
Sloan said, ''The combination with Advance Auto Parts is the next logical step in our company's evolution. Advance's retail presence, strong capability infrastructure and acquisition integration experience combined with General Parts' leadership in the commercial, independent and import segments creates a powerful platform to drive profitable growth.''