Advance Auto Parts to Transfer Worldpac to Carlyle for $1.5 Billion

August 22, 2024 09:00 AM AEST | By Team Kalkine Media

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Advance Auto Parts to Transfer Worldpac to Carlyle for $1.5 Billion — Image source: Shutterstock

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Advance Auto Parts announced on Thursday that it has agreed to sell its Worldpac automotive parts wholesale distribution business to private equity firm Carlyle for $1.5 billion in cash.

Over the past twelve months, ending in the second quarter, Worldpac generated approximately $2.1 billion in revenue and $100 million in EBITDA. This divestment aligns with Advance Auto Parts' (LSE:0H9G) strategy to sharpen its focus on improving its core business operations and enhancing financial flexibility.

Shane O’Kelly, President and Chief Executive of Advance Auto Parts, explained that the sale would enable the company to concentrate on revitalizing its Advance blended box business. The proceeds from this transaction are expected to provide greater financial flexibility and support the company’s strategic and operational review. This review aims to enhance the productivity of its remaining assets and position the company for future growth and value creation.

The transaction is projected to close by the end of the year.

Carlyle, a global investment firm, expressed excitement about the acquisition. Wes Bieligk, a partner at Carlyle, and Katherine Barasch, a senior member of Carlyle's Global Industrials team, highlighted Carlyle’s extensive experience in executing complex carve-outs. They noted that Carlyle’s investment in Worldpac would build on the firm’s successful track record in industrial carve-outs. Carlyle has invested approximately $13 billion in such carve-outs over the past two decades, with previous investments including Axalta, Nouryon, Atotech, Signode, and Allison Transmission.

Advance Auto Parts, which serves both professional installers and do-it-yourself customers, operates 4,776 stores and 321 Worldpac branches across the US, Canada, Puerto Rico, and the US Virgin Islands. This sale marks a significant step in the company’s broader strategy to streamline operations and focus on its core business areas.

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