O’Reilly makes bid to buy CSK Auto

The transaction is valued at more than $840 million when including the assumption of about $490 million of CSK debt and, if accepted, would create the third largest auto parts retailer in the country, according to a news release. O’Reilly’s Midwestern and Southeastern United States presence, combined with CSK’s Western presence, would put the merged company in nearly every region of the country.

The Springfield-based auto parts retailer says it was forced to take its proposal directly to CSK shareholders after attempting since March 2007 to strike a deal with the company’s executives.

“Having not been able to move forward privately, we believe the opportunities for our respective companies and their employees, customers and shareholders are so compelling that it is important to make our proposal public,” O’Reilly CEO Greg Henslee said in a letter to CSK, made public today.

Henslee could not be reached for comment.

CSK stock has fallen from $16.98 in March to $3.96 on Jan. 18. O’Reilly’s proposal represents a 34 percent premium over CSK’s closing stock price on Thursday and a 63 percent premium over CSK’s average trading stock price over the last 30 days, according to the release.

O’Reilly already has completed open market purchases of about 2 million shares, or 4.9 percent of CSK common stock.

The proposal is subject to approval by both companies’ boards and CSK shareholders and receipt of customary regulatory approvals.

O’Reilly said it expects the deal would increase earnings in the first year after it closes, excluding one-time transaction costs.

CSK shares (NYSE: CAO) closed Thursday at $5.95 and were trading at $8.83 as of 10:45 this morning.