While Advance Auto Parts awaits the Federal Trade Commission’s (FTC) required investigation into its acquisition of General Parts International Inc. to wrap up, some additional information about the future of the CARQUEST and WORLDPAC brands has come to the surface.
All three brands will remain after the acquisition is complete, which John Hanighen, vice president Commercial Marketing with Advance Auto Parts Professional, says should be in the first part of 2014. The acquisition, still in the agreement phase because of the FTC investigation, includes all aspects of GPI, including CARQUEST as a program group, TechNet councils, CARQUEST Training Institute and WORLDPAC.
“We’ve discussed the brands and how important they are in the customers’ minds, and that’s what’s important to us — the customers’ minds and what they’re used to,” Hanighen says, noting that the program distribution group is a new foray for Advance. “We’ve talked about the CARQUEST brand and how important that is, TechNet as well and WORLDPAC.”
He adds that for store owners, Advance has discussed keeping the CARQUEST brand for them, and working very closely with them over time. The retailer recognizes the brand equity in both CARQUEST and WORLDPAC, and in a couple of years, they will look “probably a lot like they look today.”
“It’s pretty much how they look today, especially the equity that’s been built by both of them in the commercial customers’ minds,” Hanighen states. “Bob Cushing (president and CEO of WORLDPAC) has done an incredible job building that company. Why would you ever want to do anything negative to it or change it?”
In fact, O. Temple Sloan III, president of GPI, will continue in that role, reporting to Darren Jackson, CEO of Advance. He also is expected to join the Advance Auto Parts Board of Directors.
Advance Auto Parts is acquiring GPI in an all-cash transaction valued at $2.04 billion. Both boards of directors approved the acquisition this year, and Advance announced it in mid-October. This moves comes on the heels of Advance’s acquisition of BWP at the end of 2012, a trigger for this year’s actions.
“We had an acquisition with BWP last year, which was a very large CARQUEST owner at the time, and things progressed from there,” Hanighen says. This move too gives the company a much larger presence in the aftermarket. “What we’ve talked about publicly is the scope of it, how national it is and how much larger it is. That gives us some visibility in the West Coast and such, which is excellent, which we didn’t have before. That makes it strategically a very good fit for us.”
The move will make Advance the largest aftermarket parts provider in North America, both in store count and with estimated annual sales of more than $9.2 billion. Advance, which has 3,794 stores according to the Aftermarket Business World 2013 Top 40 Auto Chain Report, will add 1,246 company-operated CARQUEST stores and 1,418 independently owned CARQEST locations for a total of 6,458 storefronts.
“But this isn’t about being the largest, it’s about being the best we can be to the customer. Numbers are numbers, but we internally have really professed the fact that it’s really about being the best we can be to the customer,” Hanighen quickly points out.
The commercial/retail mix also will change after the acquisition is complete, ending up at 55 percent commercial, 45 percent retail. Advance’s mix currently is 60 percent retail and 40 percent commercial.
“You wouldn’t make an investment like that if you didn’t want to see some kind of mix change,” Hanighen adds.
The company cannot yet comment on the integration of stores, systems and other infrastructure between Advance and GPI, or any efficiencies that could come about. It does plan to keep store branding close to the same. Repair shops that currently use CARQUEST or WORLDPAC for parts also should not expect to see many changes.
“If anything, there’s some synergies with both companies and it will be for the benefit of the customer. Both companies will get some really good pluses out of the deal. We’ve been a retailer trying to become a commercial provider,” Hanighen says. “Hopefully in the shops’ minds, we’ll come up a bit further in their mindset and their buying decisions, and the same thing on their side. We’ll offer some things like (eServices) and such to help with connectivity. It’s a nice marriage of both companies.”
He adds that while they also cannot comment on product lines that Advance will be able to carry once the acquisition is finalized, there will be some move into paint and heavy duty offerings, as those are part of customer segments GPI serves overall now.
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