Dual Acquisitions for Genuine Parts

Zacks

Subsidiaries of Genuine Parts Company (GPC) announced two acquisitions on Monday, which are expected to cumulatively boost the company’s annual revenues by more than $115 million. Motion Industries, the industrial group of the company, completed the acquisition of industrial distributor Paragon Service & Supply, Inc.

Lima, Ohio-based Paragon provides custom-designed tooling to metalworking customers in the area. This acquisition is expected to improve Genuine Parts’ annual revenues by $15 million.

Concurrently, Motion Industries (Canada), Inc., an indirect wholly-owned subsidiary of Motion Industries, announced an agreement to purchase 100% of the issued and outstanding common shares of Commercial Solutions Inc. (CSI). The acquisition is subject to customary closing conditions and approval from shareholders as well as applicable regulatory bodies and courts.

The acquisition of Edmonton, Alberta-based CSI is estimated to culminate in the first quarter of 2014. It is expected to generate annual revenues of over $100 million for Genuine Parts.

CSI is among the top independent national distributors of industrial supplies in Canada. It distributes bearings and power transmission products, complete solutions for drilling rigs and industrial and safety supplies to industrial consumers. CSI has operations in 22 locations in Canada and one in the U.S.

Genuine Parts reported a 1% year-over-year increase in earnings per share to $1.12 in third-quarter 2013 from $1.11. However, earnings missed the Zacks Consensus Estimate by 8 cents.

Revenues in the quarter grew 9.2% year over year to $3.68 billion, missing the Zacks Consensus Estimate of $3.74 billion. The year-over-year improvement was due to hike in revenues from the Automotive Parts segment, partially offset by decline in demand in non-automotive businesses.

Currently, Genuine Parts carries a Zacks Rank #4 (Sell). The company is a prominent player in the automotive replacement parts industry along with LKQ Corp. (LKQ), Motorcar Parts of America Inc. (MPAA) and Standard Motor Products Inc. (SMP).

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