O’Reilly Auto to acquire CSK for $1B

O’Reilly in early February publicized a $352 million offer for the Phoenix-based auto parts retailer and shortly after entered a standstill agreement with the company. Both company’s boards of directors have since approved a deal.

O’Reilly will purchase CSK’s roughly 44 million outstanding shares for about $528 million and assume about half a billion dollars in debt. CSK shareholders will receive $11 of O’Reilly common stock, subject to a collar, plus $1 in cash for each CSK share. Based on CSK’s closing stock price of $9.31 a share on Monday, O’Reilly expects to issue about 16 million shares to CSK stockholders, according to a company news release.

In an investor conference call this morning, O’Reilly CEO Greg Henslee called the transaction “strategically compelling.”

“One of the main aspects is the fact that our two companies maintain highly complimentary business models in two distinctive regions of the country,” he said during the call. “We will be well positioned to expand our geographical reach.”

CSK has more than 1,300 stores primarily in the Western half of the country, while O’Reilly has nearly 1,900 stores in the Midwest and Southeast.

The acquisition would make O’Reilly the third largest auto parts retailer in the country, according to the release. CSK and O’Reilly combined recorded about $4.4 billion in revenues last year.

Henslee said the transaction is expected to close this summer.

O’Reilly has obtained a $1.2 billion asset-based revolving credit facility with Bank of America and Lehman Brothers Inc. to refinance debt, fund the cash portion of the deal and cover other transaction expenses, according to the release.[[In-content Ad]]