* Carlyle, Leonard Green, KKR and CD&R among bidders-sources
* Blackstone advising Advance Auto on alternatives-sources
* Advance Auto shares drop 6 percent
By Greg Roumeliotis and Soyoung Kim
NEW YORK, Nov 29 An auction of Advance Auto
Parts Inc failed to attract bids that met its price
expectations, making it unlikely the auto parts retailer will
proceed with plans to sell itself, according to four people
familiar with the matter.
The company ran a limited auction process that attracted
interest from buyout firms including Carlyle Group LP,
Leonard Green & Partners LP, KKR & Co LP and Clayton
Dubilier & Rice LLC, the sources said this week.
Details on bids and management's valuation expectations
could not be learned. The auction came to a standstill after the
gap in price expectations between the parties proved too wide,
two of the sources said.
The Roanoke, Virginia-based company had a market value of
more than $5.7 billion as of Wednesday, up 10 percent since Nov.
1 when news of a potential sale emerged. Its shares were down 6
percent to $73.30 Thursday morning on news of the disappointing
The sources asked not to be identified because the matter is
not public. Advance Auto, Carlyle, KKR and CD&R declined to
comment, while Leonard Green did not immediately respond to
requests for comment.
Blackstone Group LP, which sources said was advising
Advance Auto on a potential sale, declined to comment.
" In our view, the divide was driven by the size of the deal,
which probably would have required more than $6.5 b illion of
total financing (both equity and debt) to complete, a n d
management's expectation of a premium, since the st o ck had
already reached a high of $93 earlier this year," M orningstar
analysts wrote in a note on Thursday.
Advance Auto has been suffering from weak consumer demand
for auto parts. Earlier this month it reported third-quarter
operating income of $150.4 million, down 15.4 percent from a
Founded in 1929 as a chain of home and auto supply stores,
the company is a retailer of car parts, accessories, batteries,
and maintenance items in the United States. It competes with
companies such as O'Reilly Automotive Inc, Autozone Inc
and Pep Boys.
In a research note published on Nov. 9, JPMorgan Chase & Co
analysts wrote that they did not envision a strategic
buyer stepping forward and that a financial sponsor was a more
They suggested a potential buyout could fetch $90 to $95 per
share, given other deals in the retail sector.
In February, Genuine Parts Co acquired Quaker City
Motor Parts Co for an undisclosed sum. In March, muffler
provider Midas was acquired by tire supplier TBC Corp - part of
Japan's Sumitomo Corp - for $173 million.
Pep Boys was targeted by private equity firm Gores Group for
a $791 million buyout in May, but the deal fell through.
Last summer, Reuters reported that auto parts supplier
General Parts International was auctioning off its retail store