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Genuine Parts draws O’Reilly cash bid for auto unit Napa
Potential sale could come by the end of summer as Genuine shifts toward its Motion industrial maintenance and repair services
Key Takeaways:
- O’Reilly Automotive has made a cash bid for Genuine Parts’ auto parts arm, according to people familiar with the matter.
- The unit could be valued at $10 billion or more and generated over $15 billion in sales last year.
- A sale could be announced by the end of summer, though Genuine Parts could keep the unit or pursue a spinoff.
Genuine Parts Co. has attracted a cash bid for its auto parts arm from O’Reilly Automotive as it seeks to refocus on its industrials business, according to people familiar with the matter.
The unit could be valued at $10 billion or more in any deal, the people added, asking not be named because the matter is private.
A potential sale of the unit could be announced by the end of the summer, they added. Genuine Parts could still decide to keep the unit or pursue a spinoff without O’Reilly, they cautioned. Another party could also emerge as a bidder.
A Genuine Parts spokesperson declined to comment. A representative for O’Reilly didn’t respond to requests for comment.
The interest comes as distributors with simpler portfolios have been favored by investors and during a volatile stretch for the automotive industry, which is grappling with high costs, economic uncertainty and affordability challenges for consumers.
Shares of Atlanta-based Genuine Parts have slipped 3.5% this year, giving the company a market value of about $16 billion.
O’Reilly Automotive, based in Springfield, Mo., is a U.S. specialty retailer of car parts and accessories. Its shares are up 1.4% this year, giving it a market value of about $77 billion. Buying the unit would be its largest deal since 2008 when it acquired CSK Auto Corp. for about $1 billion, according to data compiled by Bloomberg.
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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 separate its auto parts business and become a pure-play industrials company. The move came in the wake of a cooperation agreement with activist investor Elliott Investment Management.
Best known for its Napa brand, Genuine Parts’ aftermarket auto parts unit has more than 10,000 global locations and generated over $15 billion in sales last year.
CEO Will Stengel said in February that splitting the businesses “sharpens customer and market alignment, increases clarity and speed, simplifies operations and enables disciplined, business-specific investments to unlock long-term value.”
After the separation, the company would be left with its global industrial business, which operates under the Motion brand. It specializes in industrial maintenance and repair services. The operations had revenue of about $9 billion last year.
