ROANOKE, Va., and HOFFMAN ESTATES, Ill., Aug. 17 /PRNewswire/ -- Advance Auto Parts ("Advance") and Sears, Roebuck and Co. (NYSE: S) 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 of 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 (including 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 Sears, Management Roebuck and Co.
SOURCE Sears, Roebuck and Co.