Advance Auto Parts Buys Carquest

[DEEPNHOCK]

http://www.bloomberg.com/news/2013-10-16/advance-auto-to-buy-general-parts-in-2-04-billion-deal.html

(snippet copy - see link for entire article)

Advance Auto to Buy General Parts for Top America Ranking

By Tom Lavell - Oct 16, 2013 7:12 AM CT

Advance Auto Parts Inc. (AAP) agreed to buy closely held General Parts International Inc., adding the Carquest chain and entering Canada to become the biggest retailer of car components in North America.

The all-cash acquisition, with an enterprise value of $2.04 billion, will result in annual savings and revenue improvements of $160 million within three years after completion, Roanoke, Virginia-based Advance Auto Parts said today in a statement. The companies plan to close the deal by early 2014, it said.

Advance Auto hired Blackstone Group LP (BX) about a year ago to evaluate strategic options, a person with knowledge of the matter said at the time. The retailer bought Armonk, New York-based BWP Distributors Inc. in December, without disclosing a price, to add sites in New England and in the Mid-Atlantic area of the U.S.
Blackstone and JPMorgan Chase & Co. (JPM) were financial advisers to Advance Auto on the General Parts agreement, and Kirkland & Ellis were legal advisers, the retailer said today. Advisers to Raleigh, North Carolina-based General Parts were Wells Fargo & Co. (WFC) and the Orr Group for the financial terms and Manning Fulton & Skinner PA and Smith, Anderson, Blount, Dorsett, Mitchell & Jernigan for the legal portion.

To contact the reporter on this story: Tom Lavell in Frankfurt at tlavell@bloomberg.net
To contact the editor responsible for this story: Chad Thomas at cthomas16@bloomberg.net

[rockne10]

Friend of mine owns three Carquest independent outlets. I suspect he won't see major changes. Customers are primarily the professional auto shops and they are a loyal breed. On the other hand, company owned stores in markets that may not support brotherly competition could be in for a shakeup.

[JimC]

I wonder how this will affect the carquest stores. Generally, when I need knowledgeable people I go to our local carquest. When I need a cheap part sold by a 16 year old who's only ever opened a hood to replace a battery, I go to advance. This will either raise the bar at Advance retail stores or hurt the carquest brand.

[PlainBrownR2]

Old enough to remember when they were in competition with Trak Auto, Super Trak, and NAPA around here. I think there's one left here, and they're old enough to have, or had a machine shop behind their place....and this was all before O'Reilly's, Autozone, Advanced Auto, and Pepboys!

[rodnutrandy]

Our carquest closed up about 8 months ago. WE still have Napa, Oreilly, parts Plus ,Advance and Autozone. The CARQUEST had a sign on door that that they moved. The move was about 40 miles away! It did have a machine shop and was previously a parts plus store . I had worked for the owner of the Parts Plus store for 19 years ( left in 1993 ). That owner sold out and the store went thru a lot of hands before closing.

[62champ]

There were a four semi-trailers outside the local Carquest last week. Went in yesterday and they have all the shelves and displays moved around, Advance price makers on products. Looked at the price of Seafoam and it was $2 more than the old CQ price. Always liked the CQ oil filters because they were sourced from Wix...progress, right?

[DEEPNHOCK]

Opinions vary.
Carquest has always been more 'traditional' as far as selling automotive parts to the local repair industry.
Advance Auto has always been more consumer oriented.
This acquisition should bring the best of both worlds to Advance.
A competitor is now an ally, so that competitor is gone.
In a local market where there are the two brands, I could see a choice being made.
That choice would be easier if they were both corporate stores.
I do remember being with International Harvester when they sold the Ag line to J.I. Case.
In local markets where there were both brands, the new owner (J.I.Case) went in and sat both dealer principals down and told them that there would only be one J.I.Case dealer in town.
That meant the two dealer principals had best get together to (a) either form one dealer, or (b) one sell out to the other, or (c) one goes independent, or change marques.
Same thing could happen here, but it would happen with privately held franchises.
This is not a new thing with Advance Auto.
They bought Discount Auto Parts years ago and combined the two.
Slowly, but surely, the Discount Auto Parts name went away.
Individual product price comparisons on products is kind of funny.
Those things are priced out a long time ago, and an announcement won't change pricing at the store level.
Same thing with product offerings. There are contracts and agreements out there that are not easily changed.
And some of those 'deals' might be better on one side, and the other might not have even had availability of that particular line.
So, it could be a great deal for everybody involved. The emphasis is on 'could be'.
We shall see.... Now the betting pool is on (a)'when' Pep Boys will get sold, and (b) 'when' Wix filters will get sold.
(They are both up for sale right now)
Just an opinion.
Jeff

[dictator27]

If Advance Auto is looking at entering the Canadian market, they need to do a better job of analyzing the Canadian market than both Lowes and Target have done. Lowes entered the Canadian market several years ago and is not doing well. Target bought most of the Zellers stores (Hudson's Bay Company's discount outlets) promising to bring US prices to Canada. Hasn't happened because Target has admitted they underestimated transportation costs and higher salaries to account for a higher cost of living in Canada. Also, for a store like Target, some of the Zellers stores were not in the best part of town. The one near us is in a mall which is in a low income area.

Terry

[studegary]

The Wappingers Falls Advance is the nearest FLAPS to me at about two miles. I rarely buy anything there. Their prices are high and the help is not knowledgeable. Recently, I bought a car battery there. I was going to take it with me, but the price was the same if they installed it. They couldn't find the battery in the car and after I showed/explained it to them, they almost hooked the battery up with the polarity reversed (I stopped them just in time). One of the last things that I looked for there, seemed high priced. I went to the Poughkeepsie Advance, about 11 miles away. The price for the same item was about one-half. I bought it there. I do not know if one store is company owned and one is a franchise or if there is some other situation. For most parts, I find Rock Auto cheaper than the WF Advance, even with shipping included.

[8E45E]

The one near us is in a mall which is in a low income area.

So you're saying you live in a low income area????

Craig

[BobWaitz]

Meh. I worked at 10,000 Auto Parts back in the early 80's. None of the chains operating in the Twin Cities exist anymore. None of the chains that succeeded them exist anymore. We've got Napa, Advanced, O'Reilly, Carquest, and Autozone. I don't expect any of them to exist under those names 15-20 years from now.

On the other hand, a number of the independents still exist, notably Welle Auto Parts -- where I always sent people when we didn't have what they want. I don't imagine any of them sell in a year the number of Thermoquads and Gear Reduction starters we sold in a week back then. Actually, IMO, the thing auto parts stores have going for them these days is how much longer modern drive trains last. When a car lasts 3 times as long as a car from 20 years ago, you sell a lot more rotors and pads!

[dictator27]

So you're saying you live in a low income area????

Craig

Terry

[Corvanti]

here in town, there are carquest, autozone, advance and o'reillys within 1/2 mile of each other.

my 2 cents: with online auto parts - ebay, amazon, etc. plus continuous emails from az and adv offering large discounts for online purchases over a certain amount of $$$, most "non-emergency" parts will be purchased online.

in the last few months, i've had to show the kids working at a local store what online price was shown if the part was "in stock" at the local store i went to.

soon, it's going to be like the gas stations used to be - cash or credit, with credit costing more. picking up a part in stock at a store will be more than a online price that they put on a delivery truck and get it out to the store the next day...

inventory control!

[Stu Chapman]

Does anyone have any idea what their plans are for Canada. BTW, I agree with dictator27's post about Lowes and Target. They came to Canada too late and without effective research and are not doing well at all.

Stu Chapman

[dictator27]

Does anyone have any idea what their plans are for Canada. BTW, I agree with dictator27's post about Lowes and Target. They came to Canada too late and without effective research and are not doing well at all.

Stu Chapman

It has been several years since Lowes came to Canada. Considering that, there is precisely one Lowes store in the metro Vancouver area (about 3.2 million people). I've never been to it because it's too far away, but the last I heard, it has basically been reduced to a hardware store.

My wife and I went to the opening of one of the Target stores here (not the one in my post above ). Target supposedly spent $2 million renovating it. It looked exactly the same inside as the old Zellers store it replaced. We both wondered where the money had gone.

Terry