LONDON, UK / ACCESSWIRE / April 16, 2018 / Active-Investors.com has just released a free research report on Genuine Parts Co. (NYSE: GPC) ("GPC"). If you want access to this report all you need to do is sign up now by clicking the following link www.active-investors.com/registration-sg/?symbol=GPC as the Company's latest news hit the wire. On April 12, 2018, the Company announced the divestment of its office products business, S.P. Richards Co., and merger of the divested business with Essendant Inc. (NASDAQ: ESND). The merger brings together two of the leading office products wholesalers in the US with combined sales of over $7 billion for FY17. Register today and get access to over 1,000 Free Research Reports by joining our site below:
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Active-Investors.com is focused on giving you timely information and the inside line on companies that matter to you. This morning, Genuine Parts and Essendant most recent news is on our radar and our team decided to put out fantastic reports on these companies that are now available for free below:
www.active-investors.com/registration-sg/?symbol=GPC
www.active-investors.com/registration-sg/?symbol=ESND
Management Quotes
Commenting on the divestment and merger with Essendant, Paul Donahue, President and CEO of GPC, said:
"This transaction is the result of a comprehensive process to maximize the value of S.P. Richards and represents a key step in the execution of Genuine Parts Co.'s long-term strategy by enabling us to increase our focus on our larger, core global automotive and industrial businesses."
Ric Phillips, President and CEO of Essendant, added:
"Combining resources, leadership and operational expertise from both teams, and the unique strengths of both businesses will enhance our ability to compete and help our customers succeed in the face of a rapidly evolving market."
Highlights of the Transaction
As per the agreement signed between GPC and Essendant, GPC will first divest the business of S.P. Richards into a standalone company and then merge the divested company with Essendant. The Essendant/ S.P. Richards merger has been structured as a Reverse Morris Trust. In the cash plus stock deal, Essendant will offer its stock at the time of closing plus approximately $347 million as a one-time cash payment to GPC. Based on this, the transaction values S.P. Richards' business at approximately $680 million. Once the merger is completed, GPC's shareholders will own 51% of the newly merged company whereas Essendant's shareholders will own balance 49% on a diluted basis. This implies that there will be approximately 80 million diluted shares of Essendant which will be outstanding at the time of closing. The transaction has been approved by the Board of Directors of both Essendant and GPC.
The transaction is expected to close before end of FY18 and is subject to regulatory and shareholders' approvals and other closing condition. The deal would be tax-free for shareholders of both Essendant and GPC.
Operations of merged Company
Once the merger is completed, the merged entity will be named Essendant. The management of the merged company will be led by Essendant's Ric Phillips as President and CEO; Janet Zelenka as CFO; while Rick Toppin (current President and CEO of S.P. Richards) will take over as Chief Operating Officer. The Board of the merged company will be led by Charles K. Crovitz (current Chairman of Essendant Board) as Chairman, and consist of three Directors appointed by Essendant, four Directors appointed by GPC and four Directors appointed by mutual agreement.
The merged company will have headquarters at both Deerfield, Illinois and Atlanta, Georgia.
Benefits of the deal
The merger brings together two companies with pro-forma net sales of approximately $7 billion, adjusted earnings before interest, tax, depreciation, and amortization (EBITDA) of $300 million and adjusted EBITDA margins of 4.2% in FY17. The merged company is expected to have a greater financial strength and flexibility allowing it to take advantage of business opportunities and create value for its shareholders. Additionally, the merged company will benefit from the larger economies of scale, enhanced geographical footprint and better product offerings to its customers.
The merger is expected to result in annual run-rate cost synergies of over $75 million and working capital improvements of over $100 million. The cost synergies are expected to result from merging of various duplicate operations like sourcing, supply chain and selling, general, and administrative (SG&A) functions. The merged company expects that more than 90% of the cost synergies will be realized within two years of closing of the deal and expects to incur one-time transaction costs of less than $50 million.
About Genuine Parts Co. and S.P. Richards Co.
Atlanta, Georgia-based and founded in 1928, GPC is a global distributor of automotive replacement parts. It has a distribution network is spread across US, Canada, Mexico, Australasia, France, the UK, Germany, and Poland. GPC also distributes industrial replacement parts and electrical and electronic components in US, Canada, and Mexico via its Industrial Parts Group. GPC's revenue for FY17 was $16.3 billion.
S.P. Richards is GPC's business products business which distributes more than 98,000 items to over 9,700 resellers and distributors across US and Canada from a network of 55 distribution centers.
About Essendant Inc.
Deerfield, Illinois-based Essendant is a wholesale distributor of workplace essentials with a product portfolio of over 170,000 items, including janitorial and breakroom supplies, technology products, traditional office products, industrial supplies, cut sheet paper products, automotive products and office furniture. The Company's business is divided into four main verticals - Office and Facilities business, Industrial, Automotive business and CPO business. The Company's customers include independent resellers, national resellers and ecommerce businesses.
Essendant's strong distribution network enables the Company to ship most products overnight to more than 90% of the US.
Stock Performance Snapshot
April 13, 2018 - At Friday's closing bell, Genuine Parts' stock slightly dropped 0.68%, ending the trading session at $89.52.
Volume traded for the day: 763.57 thousand shares.
Stock performance in the past twelve-month period – up 0.11%
After last Friday's close, Genuine Parts' market cap was at $13.22 billion.
Price to Earnings (P/E) ratio was at 19.80.
The stock has a dividend yield of 3.22%.
The stock is part of the Services sector, categorized under the Business Equipment industry.
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