Carlyle agrees to buy Advance Auto Parts Unit for $1.5B
(Bloomberg) — Carlyle Group Inc. (CG) is acquiring Advance Auto Parts Inc.’s (AAP) Worldpac unit for $1.5 billion, striking the first major industrial investment for the firm in over two years.
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Worldpac, a wholesale distributor of original equipment replacement parts, generated about $2.1 billion in revenue for the 12 months ended June 30, according to a statement reviewed by Bloomberg News.
Advance Auto Parts has been under pressure from shareholder activists to divest the Worldpac unit to improve compensation to better compete with AutoZone Inc. and O’Reilly Automotive Inc. Advance Auto Parts said in November that it was initiating a sale process for Worldpac, as well as the Canadian business under the Carquest banner.
Worldpac stands to benefit as cars — and their maintenance — become increasingly complex and older vehicles continue to add mileage.
“This industry is in particular very resilient because it’s not tied to new car production,” said Martin Sumner, Carlyle’s head of global industrial & transportation. “It’s tied to the car parc, which is huge and continues to age.”
Carlyle has invested about $13 billion in industrial carve-outs over the past two decades, including in such companies as Nouryon, Axalta, Atotech, Signode and Allison Transmission, according to the statement. One of Carlyle’s last transactions in the sector was its 2022 investment in food processing and packaging equipment maker Duravant, according to its website.
In a carve-out transaction announced last week, Carlyle agreed to acquire Baxter International Inc.’s kidney care business for $3.8 billion.
Shares of Advance Auto Parts are worth only about a fourth of their peak in 2021. This year, the shares have fallen 28% since March 21, giving the Raleigh, North Carolina-based company a market value of about $3.7 billion.
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