RALEIGH, N.C. AND WASHINGTON, D.C. — Advance Auto Parts Inc. (NYSE: AAP) has agreed to sell Worldpac, the Raleigh-based company’s automotive parts wholesale distribution business, to funds managed by global investment firm Carlyle (NASDAQ: CG) for $1.5 billion in cash.
Advance Auto Parts operated 321 Worldpac locations primarily within the United States as of the end of the second quarter. These warehouses, 135 of which are branded Autopart International, are generally larger than the company’s retail locations, averaging approximately 26,000 square feet.
Worldpac offers over 293,000 parts for domestic and import vehicles and primarily serves professional customers such as vehicle repair shops, with services including same-day delivery of automotive parts through a fleet of company-owned vehicles.
Over the past 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 the end of the year, with Advance expecting net proceeds of approximately $1.2 billion after taxes and transaction fees.
These 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 an earnings call earlier today.
“Reaching an agreement to sell Worldpac is a major milestone for the company,” continued O’Kelly. “Our vision from here is to further our commitment to the blended box model, servicing both professional and DIY customers through our retail footprint.”
Centerview Partners is serving as financial advisor and Hogan Lovells US LLP is serving as legal advisor to Advance in the transaction. BofA Securities and BMO Capital Markets are acting as financial advisors and Latham & Watkins is serving as legal advisor to Carlyle in the transaction.
Advance Auto Parts is a leading automotive aftermarket parts provider, operating 4,776 stores primarily within the U.S. The company’s stock price closed at $61.92 per share on Wednesday, Aug. 21, down from $67.10 one year ago. However, the price dropped significantly to $48.37 in early-morning trading following the earnings call, as Advance cut its fiscal-year 2024 outlook and missed on its earnings predictions, hitting only 75 cents per share against analyst predictions of around $1 per share.
Washington, D.C.-based Carlyle is a global investment firm that operates across three business segments: Global private equity, global credit and global investment solutions. The company had $435 billion of assets under management as of June 30. Carlyle’s stock price closed at $40.16 on Wednesday, Aug. 21, up from $28.27 one year ago.
—Katie Sloan