Advance Auto Parts To Buy General Parts In $2.04 Bln Deal; Backs FY13 EPS View

(RTTNews) - Advance Auto Parts, Inc. (AAP), a provider of automotive aftermarket parts, accessories, batteries, and maintenance items, announced Wednesday that it agreed to acquire General Parts International Inc. or GPII, a privately held distributor and supplier of original equipment and aftermarket replacement products for commercial markets operating under the CARQUEST and WORLDPAC brands, in an all-cash transaction with an enterprise value of $2.04 billion.

The transaction has been approved by the boards of directors of both companies.

The company stated that Temple Sloan, III President of General Parts International, Inc. will continue as President of GPII, and is expected to join the Advance Auto Parts Board of Directors.

The combined company will be headquartered in Roanoke, Virginia and will continue to maintain a presence in Raleigh, N.C.

Advance anticipates that the transaction will result in approximately $160 million of annual run-rate synergies to be fully realized within three years after closing.

The transaction is also expected to generate considerable free cash flow and deliver significant estimated fiscal 2014 Cash earnings per share accretion of more than 20% excluding one-time costs to achieve synergies and a percentage increase in the low teens including one-time costs to achieve synergies.

The transaction is subject to regulatory approvals and customary closing conditions and is expected to close by late 2013 or early 2014.

In addition, Advance Auto released its preliminary third quarter results.

Total sales for the third quarter increased 4.3% to $1.52 billion, as compared with total sales during the third quarter of fiscal 2012 of $1.46 billion. The sales increase was driven by the acquisition of B.W.P. Distributors, Inc. or BWP and the net addition of 170 new stores over the past 12 months, partially offset by a comparable store sales decrease of 2.0% versus a comparable store sales decrease of 1.8% during the third quarter of fiscal 2012.

The company's operating income during the third quarter is expected to be $170.7 million which was a 13.5% increase versus the third quarter last year. Third quarter earnings per share are expected to be $1.42 which was a 17.4% increase versus the third quarter last year. Analysts polled by Thomson Reuters expect the company to report earnings of $1.30 per share for the third-quarter. Analysts' estimates typically exclude special items.

The company reaffirmed its 2013 earnings per share outlook in a range of $5.30 - $5.45. Analysts expect the company to report earnings of $5.53 per share for fiscal 2013.