Advance Auto Parts to Buy General Parts for $2.04 Billion

Advance Auto Parts (NYSE: AAP) announced on Wednesday, October 16, that it is preparing to buy General Parts International Inc., which owns the Carquest and Worldpac brands, for $2.04 billion. The boards of both companies have approved the deal, which is set to create the largest automotive replacement parts provider in North America with combined sales of more than $9.2 billion.

The deal will combine 1,418 Carquest outlets and 1,246 company operated stores with 4,015 Advance Auto Parts locations operated in the U.S., Puerto Rico and the Virgin Islands. Altogether, the purchase is expected to increase the brand's customer base and place the company in direct competition with AutoZone (NYSE:AZO), the current market leader in the auto parts business. AutoZone reported adjusted sales of about $9 billion for the year ending August 31.

"We view Advance Auto's decision as a smart, strategic acquisition that vaults the company into a much stronger position in the faster-growing and more attractive do-it-for-me segment and gives them a crown jewel in Worldpac," Credit Suisse analyst Simeon Gutman said in a client note, Reuters reported.

The transaction is expected to close by late 2013 or early 2014.

Advance Auto Parts said it expects to save about $160 million annually within three years of the deal closing. JPMorgan Chase Bank NA (NYSE: JPM-D) has offered financing commitment for the transaction, which will be financed with cash and debt.

For more:
-See this Los Angeles Times article
-See this Rueters article

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