Why Advanced Auto Shares Advanced
Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of automotive parts retailer Advanced Auto Parts soared 17% today after the company agreed to acquire General Parts International for $2.04 billion.
So what: Advance Auto is making the move to expand its geographic presence and, judging by the stock's big surge today, Mr. Market is thrilled with the price management is paying to do it. In fact, the deal would create North America's largest auto parts provider, with roughly $9.2 billion in sales, giving investors plenty of good vibes over its scale and competitive position going forward.
Now what: The deal is expected to close by late 2013 or early 2014. "We believe the combination of the two companies is a great fit and the synergy of GPII's assets with our capabilities will allow us to capitalize on market opportunities that will create value for our shareholders and provide even better service to our customers," Advanced Auto CEO Darren Jackson said. With Advance Auto shares trading at a P/E of 20, however, that bullishness might now be baked into the valuation.
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The article Why Advanced Auto Shares Advanced originally appeared on Fool.com.
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