Advance Auto Parts Inc. has entered into a definitive agreement to acquire General Parts International Inc. (GP) for $2.04 billion.
GP is a distributor and supplier of original equipment and aftermarket replacement products for commercial markets operating under its CarQuest Corp. and Worldpac Inc. subsidiaries.
The all-cash transaction has been approved by the boards of directors of both companies. It creates the largest automotive aftermarket parts provider in North America, with annual sales of more than $9.2 billion and more than 70,000 associates.
Advanced Auto Parts says the acquisition will accelerate its growth strategy and enhance shareholder value through the following strategic benefits:
* Creates market leader. Advance becomes the top automotive aftermarket parts provider in North America with a balanced platform for growth between the do-It-yourself and commercial segments. It also becomes the No. 1 distributor of import automotive parts, with the largest automotive aftermarket business-to-business e-commerce platform in North America.
* Delivers scale. The purchase provides the company with "complete coast-to-coast coverage across North America, creating a company with scale, reach and expanded growth opportunities benefiting shareholders, customers and team members."
* Accelerates complementary market opportunities. Advance's product and category offerings in both core and new product lines (paint and heavy duty) will be expanded, and a new sales channel with independent customers will be created.
* Strengthens leading brands and capabilities. It strengthens Advance's ability to serve customers through the transfer of CarQuest's commercial capabilities and "team member" parts knowledge into Advance stores while expanding DIY into select company operated CarQuest stores.
"This transformational transaction provides a compelling strategic opportunity for Advance to expand our geographic presence and commercial capabilities to better serve customers," says CEO Darren Jackson.
"The addition of 1,246 company-operated stores and 1,418 independently owned CarQuest locations provides us with an immediate platform and scale across North America, full market coverage and the opportunity to position ourselves as the market leader in the commercial business."
O. Temple Sloan III will remain president of General Parts International. He will report to Jackson. The combined company will be headquartered in Roanoke, Va., and continue to maintain a presence in Raleigh, N.C.
"The combination with Advance Auto Parts is the next logical step in our company's evolution," says Sloan. "Advance's retail presence, strong capability infrastructure and acquisition integration experience combined with GPII's leadership in the commercial, independent and import segments creates a powerful platform to drive profitable growth."
Advance Auto Parts intends to finance the acquisition through a combination of senior notes, bank debt and existing cash on hand. Advance has received a financing commitment from JPMorgan Chase Bank N.A.; the senior notes offering and bank debt syndication are expected to occur prior to closing.
The transaction is subject to regulatory approvals and customary closing conditions, and is expected to close by late 2013 or early 2014.
