Advance Auto Parts Sells Wholesale Arm to Carlyle Group for £1.2 Billion

Advance Auto Parts has offloaded its wholesale operation, Worldpac, to funds managed by the Carlyle Group for £1.2 billion. The deal, announced on Thursday, is expected to be finalised by the end of the year.

The sale allows Advance to refocus its efforts on its core retail business, which has been facing challenges. CEO Shane O’Kelly stated that the proceeds will provide greater financial flexibility for the company to improve the performance of its remaining assets and prepare for future growth.

Worldpac has generated roughly £1.6 billion in revenue and approximately £80 million in EBITDA over the past 12 months. The sale comes amid pressure from activist investors who had called for the divestiture of Worldpac to boost shareholder value and enhance Advance’s competitiveness in the automotive parts market.

The Carlyle Group believes Worldpac is well-positioned for future success as the automotive landscape becomes increasingly complex and the average age of vehicles continues to rise. Martin Sumner, Carlyle’s head of global industrial and transportation, highlighted the resilience of the automotive aftermarket industry, which is less reliant on new car production than other sectors.

“This industry is particularly resilient because it’s not tied to new car production,” said Sumner. “It’s tied to the car parc, which is huge and continues to age.”

The growing number of older cars on the road has benefitted companies like Advance and AutoZone, as drivers increasingly need to maintain and repair their vehicles.

In other automotive news, industry giants experienced a mixed bag of results during the second quarter of 2024. While electric vehicle manufacturer Tesla set new records with $20 billion in revenue, driven by energy storage deployments and regulatory credit revenues, Stellantis faced a challenging period, reporting a significant decline in net profit and revenue.

Stellantis CEO Carlos Tavares attributed the disappointing performance to excessive R&D, CapEx and M&A expenses, internal operational issues, and ineffective marketing strategies, particularly in the US market.