Disassembled engine parts at an automotive shop in Oklahoma City. (Nick Oxford/Bloomberg)
key takeaways:
- O’Reilly Automotive has made a cash bid for the auto parts arm of Genuine Parts, according to people familiar with the matter.
- The entity could be valued at $10 billion or more and have sales of more than $15 billion last year.
- A sale could be announced by the end of the summer, although Genuine Parts could keep the unit or pursue a spinoff.
Genuine Parts Co. has attracted a cash bid from O’Reilly Automotive for its auto parts arm as it looks to refocus on its industrial business, according to people familiar with the matter.
Any deal could value the entity at $10 billion or more, the people said, asking not to be named because the matter is private.
He said a potential sale of the unit could be announced by the end of the summer. He warned that Genuine Parts could still decide to retain the unit or pursue the spinoff without O’Reilly. Any other party may also emerge as a bidder.
A spokesperson for Genuine Parts declined to comment. A representative for O’Reilly did not respond to requests for comment.
This interest comes as distributors with simpler portfolios have been favored by investors and during a volatile period for the automotive industry, which is grappling with higher costs, economic uncertainty and affordability challenges for consumers.
Shares of Atlanta-based Genuine Parts have fallen 3.5% this year, eroding the company’s market value to about $16 billion.
Springfield, MO. O’Reilly Automotive, based in Washington, D.C., is an American specialty retailer of car parts and accessories. Its shares have risen 1.4% this year, giving it a market value of about $77 billion. Buying the unit would be its biggest deal since 2008 when it acquired CSK Auto Corp for about $1 billion, according to data compiled by Bloomberg.
Genuine Parts is best known for its NAPA aftermarket auto parts brand. (NAPA Auto Parts)
Genuine Parts announced in February that it was working with advisers JPMorgan Chase & Co. and Guggenheim Securities to spin off its auto parts business and become a pure-play industrial company. The move comes in the wake of a cooperation agreement with activist investor Elliott Investment Management.
Best known for its NAPA brand, Genuine Parts’ aftermarket auto parts division has more than 10,000 global locations and had sales of more than $15 billion last year.
CEO Will Stengel said in February that splitting the businesses “accelerates customer and market alignment, increases clarity and speed, simplifies operations and enables disciplined, business-specific investments to unlock long-term value.”
Following the separation, the company will be left with its global industrial business, which operates under the Motion brand. It specializes in industrial maintenance and repair services. Operating revenues last year were nearly $9 billion.
