Tomahawk, WI 10/18/2013 (BasicsMedia) – Advance Auto Parts, Inc. (NYSE:AAP) operates primarily in the U.S as a specialty retailer of automotive batteries, accessories, and aftermarket parts. AAP, whose market cap stands at $7.14 billion, also sells maintenance items in the U.S. The company announced that it intends to increase its repair shop business through a $2 billion acquisition of General Parts International Inc. This acquisition has huge ramifications in the industry since it will make AAP the largest auto parts retailer in the whole of North America, thus increasing its market share and revenue.

General Parts International Inc’s North American Presence

General Parts International Inc already boasts of more than 1,400 outlets spread all over North America. These outlets will be under the direct management of AAP once it finalizes the deal. It intends to compliment its car parts business with the repair shop business formerly being undertaken by General Parts International Inc. This piece of news has been received quite well within the industry and the stock market. AAP’s shares have shot up by as much as 20% to set new records simply because of its acquisition of General Parts International Inc\s repair business.

AAP to Spend $2 Billion on Acquisition, But Will Gain More

AAP will gain a lot by acquiring General Parts International Inc for slightly more than $2 billion. The latter owns the World Pac, a company whose replacement parts are the best ranked for truck brands and imported cars. You will not get a bigger operator the Carquest chain than General Parts, and AAP will assume all these responsibilities for $2 billion. Furthermore, both World Pac and Carquest raised a combined $2.9 billion in sales in the last one year. The two are already the largest suppliers of automotive retail parts in the North American region.

AAP is gaining more than $2 billion it intends to pay in order to acquire General Parts. AAP’s value across the North American region as well as the rest of the world is set to rise manifold through this single acquisition. I believe this acquisition will bring more business to AAP, and this will inevitably help to increase its revenues and profits. AAP is buying a company that has been making sales worth billions of dollars and this can only augur well for it. I highly recommend this stock even though more North Americans are buying new instead of used cars.

AAP Has a Lot of Work to do

AAP still has a lot of work ahead. The industry is in serious threat now that more North Americans are purchasing new cars thus not spending a lot on repairs and accessories or aftermarket parts like those that they used to do in the past. What is not in doubt is the fact that AAP’s footprint in automotive repair is likely to span the entire continent. Carquest has enjoyed a large percentage of its revenue, precisely 85%, from commercial repair accounts. AAP is acquiring business that has been doing quite well, and with greater potential for profits.

If the automotive industry is quite attractive to you, I would recommend AAP stock to you. This single acquisition will improve its value and stock in the market.

DISCLAIMER: This content is neither an offer nor recommendation to buy or sell any security. We hold no investment licenses and are thus neither licensed nor qualified to provide investment advice. The content in this report or email is not provided to any individual with a view toward their individual circumstances. While all information is believed to be reliable, it is not guaranteed by us to be accurate. Individuals should assume that all information contained in our newsletter is not trustworthy unless verified by their own independent research. Also, because events and circumstances frequently do not occur as expected, there will likely be differences between the any predictions and actual results. Always consult a real licensed investment professional before making any investment decision. Be extremely careful, investing in securities carries a high degree of risk; you may likely lose some or all of the investment.