RALEIGH, NC AND WASHINGTON, DC — Advance Auto Parts Inc. (NYSE: AAP) has agreed to sell Worldpac, the Raleigh-based company’s wholesale auto parts distributor, to funds managed by global investment firm Carlyle (NASDAQ: CG) for $1.5 billion in cash.
Advance Auto Parts operated 321 Worldpac locations at the end of the second quarter, primarily in the United States. These warehouses, 135 of which carry the Autopart International brand, are generally larger than the company’s retail locations, averaging approximately 25,000 square feet.
Worldpac offers over 293,000 parts for domestic and imported vehicles and primarily serves professional customers such as automotive repair shops. The company’s services include same-day delivery of auto parts through a fleet of company-owned vehicles.
Over the last 12 months, these locations generated approximately $2.1 billion in revenue and $100 million in earnings before interest, taxes, depreciation and amortization (EBITDA). Advance expects to close the transaction before year-end. Advance expects net proceeds of approximately $1.2 billion after taxes and transaction fees.
The proceeds will be used to strengthen the company’s balance sheet and invest in its core retail business, said Shane O’Kelly, President and CEO of Advance Auto Parts, during a conference call today to discuss financial results.
“The agreement to sell Worldpac is an important milestone for the company,” O’Kelly continued. “Our vision is to further advance our commitment to the blended box model and serve both professional and DIY customers through our retail presence.”
Centerview Partners is acting as financial advisor and Hogan Lovells US LLP is acting as legal advisor to Advance in the transaction. BofA Securities and BMO Capital Markets are acting as financial advisors and Latham & Watkins is acting as legal advisor to Carlyle in the transaction.
Advance Auto Parts is a leading supplier of auto replacement parts and operates 4,776 stores, primarily in the United States. The company’s stock price closed at $61.92 per share on Wednesday, August 21, down from $67.10 a year ago. However, in early morning trading following the earnings call, the price fell sharply to $48.37 as Advance lowered its fiscal 2024 outlook and missed its earnings estimates. The company only reached 75 cents per share versus analyst forecasts of about $1 per share.
Carlyle, based in Washington, DC, is a global investment firm that operates in three business segments: Global Private Equity, Global Credit and Global Investment Solutions. The firm had $435 billion in assets under management as of June 30. Carlyle’s stock price closed at $40.16 on Wednesday, August 21, up from $28.27 a year ago.
—Katie Sloan
