By Reuters | Updated: August 22, 2024
Aug 22 (Reuters) – Advance Auto Parts (AAP.N) said on Thursday it would sell its Worldpac unit to private equity firm Carlyle Group (CG.O) for $1.5 billion in cash as part of its latest attempt at streamlining operations, but cut its annual results forecast.
Shares of automotive afterparts provider were down about 11% in premarket trade.
The company has been under heavy pressure from activists investors who have taken stakes in the firm and pressed it to offload Worldpac, a wholesale parts distribution business, as it navigates a turnaround.
Centerview Partners served as financial advisor to Advance, while Hogan Lovells US served as legal advisor on the transaction, which is expected to close before the end of the year.
Advance also cut its annual sales and profit forecasts on Thursday after a bumpy demand for auto parts.
It now expects its net sales in 2024 to be between $11.15 billion and $11.25 billion, down from its prior expectations of $11.3 billion and $11.4 billion.
Advance expects annual profit per share to be between $2 and $2.50, compared with the prior forecast of $3.75 and $4.25.
Worldpac generated about $2.1 billion in revenue for the year ended June 30.
Advance acquired Worldpac in 2014 when it bought General Parts International.
The North Carolina-based company’s financial performance and stock price has lagged behind rivals AutoZone (AZO.N) and O’Reilly Automotive (ORLY.O).
Its stock tumbled around the time S&P Global Ratings downgraded its debt to “junk”.
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@ Thomson Reuters 2024
