Advance Auto Parts and Western Auto Supply Co. to Merge
17 August 1998
Advance Auto Parts and Western Auto Supply Co., Subsidiary Of Sears, Announce Merger Plans Growing Auto Parts Retailer and Wholesaler Will Have $2.1 Billion in Sales,
Over 1,500 Retail Stores
ROANOKE, Va. and HOFFMAN ESTATES, Ill., Aug. 17 -- Advance
Auto Parts ("Advance") and Sears, Roebuck and Co. today announced the signing
of a definitive agreement under which the Western Auto subsidiary of Sears,
including both the retail and wholesale operations, will merge with Advance.
Advance operates 915 automotive parts and accessories stores in 17 states.
Western Auto, based in Kansas City, Mo., is a specialty retailer of automotive
parts and accessories, operating 590 stores in the U.S. under the Parts
America name, 40 stores primarily in Puerto Rico under the Western Auto name,
and an extensive Western Auto wholesale dealer network. Advance had sales for
fiscal 1997 of $848.1 million and Western Auto had 1997 sales of $1.3 billion,
which includes $248 million from the wholesale dealer network and $193 million
from its stores in Puerto Rico.
In exchange for its holdings in Western Auto, Sears will receive
approximately $175 million in cash, and will hold approximately 40 percent of
the common stock of Advance. Current investors in Advance, including an
investment fund organized by Freeman Spogli & Co. Incorporated, will invest an
additional $70 million in Advance. The merger is expected to close by year
end, subject to certain regulatory approvals.
The combined entity will operate domestic retail stores under the Advance
Auto Parts name in most markets. The wholesale dealer network and Puerto Rico
stores will continue to operate primarily under the Western Auto banner. The
combination draws on the strengths of both companies by developing a much
stronger entity that can provide more customers with high level service, top
quality auto parts and competitive prices through over 1,500 retail stores in
36 states and nearly 800 'dealer' stores in 48 states. Advance will maintain
its headquarters in Roanoke and will be headed by Garnett E. Smith, President
and Chief Executive Officer of Advance. Nicholas F. Taubman will continue as
Chairman of the Board of Directors of Advance. Certain functions will remain
in Kansas City.
"The combination of Advance Auto Parts and Western Auto/Parts America will
further strengthen Advance's position as a leading specialty retailer and
distributor of automotive parts and accessories in the U.S.," Mr. Smith
stated. "Both companies share a culture that focuses on outstanding customer
service, along with a broad product selection and competitive prices. Our
markets are contiguous, and the merger will expand Advance's geographic reach
from the Southeast to the Northeast, Midwest, and Southwest. In short, we
will have a solid platform upon which to continue our growth in an attractive
market segment."
"Following the successful repositioning of Western Auto as a parts-only
format, we explored ways to continue its growth without diverting capital from
Sears core businesses," said Arthur C. Martinez, Chairman and CEO of Sears,
Roebuck and Co. "By retaining an equity position in the new company, Sears
will participate in the upside potential of this merger and create more value
for our shareholders."
Mr. Smith added, "We are pleased that Sears will be a 40 percent
stockholder in the combined company, and that our current investors are
providing additional capital to support our growth, representing a strong vote
of confidence in Advance's operating formula and long-term potential."
FACT SHEET
Advance Auto
Parts Western Auto Supply Co.
STORE NAMES Advance Auto Parts Parts America
Western Auto
HEADQUARTERS Roanoke, VA Kansas City, MO
REVENUES (FY97) $848.1 million $1.3 billion
(includes amounts below)
-Wholesale: $248 million
-Puerto Rico: $193 million
NO. OF STORES 915 590 Parts America
40 Western Auto
767 Western Auto wholesale stores
NO. OF EMPLOYEES 13,000 10,000
OWNERSHIP Investment Funds, Subsidiary of
Management Sears, Roebuck and Co.
