US Auto Parts Purchases JC Whitney for $27.5 Million

JC Whitney Logo

CARSON, Calif., – U.S. Auto Parts (Nasdaq: PRTS), one of the largest online providers of automotive aftermarket parts and accessories, today announced that it has signed a definitive Stock Purchase Agreement to acquire Whitney Automotive Group for the purchase price of $27.5mm and assumption of approximately $11mm in trade-related and other payables. Whitney Automotive Group is expected to have $110 – $120 million in revenues under U.S. Auto Parts ownership in 2010. Whitney has struggled recently falling from over $160 million in annual sales to just over $100 million, and a net profit of roughly $5 million annually.

The Whitney Automotive Group, a 95 year old company best known for the JC Whitney brand, is part of a group of established brands that distribute aftermarket automotive parts primarily focused on the “Do It Yourself” customer in the automotive accessories aftermarket. Its brand portfolio includes Stylintrucks.com, Carparts.com, and Allbikesupershop.com which, along with JCWhitney.com, generate approximately 3mm monthly unique visitors.

“With this acquisition, U.S. Auto Parts adds one of the most recognizable consumer facing brands in the online auto parts market, which should increase our customer reach, provide product line expansion and enhance our distribution footprint,” said U.S. Auto Parts’ Chief Executive Officer Shane Evangelist. “And, most importantly, we will be adding very talented team members who can help U.S. Auto Parts take advantage of the favorable market conditions for the online auto parts market.”

In addition to a leading presence in the accessories market, this acquisition also provides U.S. Auto Parts with product line expansion into ATVs, RVs and motorcycles, as well as deep product knowledge into niche segments like Jeep, VW and truck enthusiasts.

Whitney Automotive Group owns a $10mm state-of-the-art distribution center located in Illinois which holds approximately $15mm of owned inventory and was custom built for B2C distribution of auto parts. The acquisition would allow U.S. Auto Parts to complete a three-distribution center network, and thus should increase its distribution footprint and allow for 95% of customers in the US to receive parts within two days of purchase using ground or common carriage.

“This acquisition clearly demonstrates U.S. Auto Parts’ commitment to the aftermarket accessories category and we look forward to working with our new suppliers,” said Evangelist.

“We believe that the combination of Whitney’s established brands and focus on the customer experience, coupled with U.S. Auto Parts’ capacity to compete online, creates a huge opportunity for growth,” said Whitney’s Chief Executive Officer Tom West.

Closing of the acquisition is subject to certain conditions specified in the Stock Purchase Agreement and is anticipated to occur during August 2010. The Company has made a $1 million deposit into an escrow account; if the Company determines, for other than a breach of the Stock Purchase Agreement, that it does not wish to close the acquisition it will forfeit the deposit; otherwise, the deposit will be applied to the purchase price at closing . If the acquisition does not occur by certain dates, the purchase price may increase to a maximum of $29 million. The purchase price is also subject to adjustment based on a post-closing net working capital calculation.

U.S. Auto Parts expects the integration of the companies to be completed in 2011.

About U.S. Auto Parts Network, Inc.

Established in 1995, U.S. Auto Parts is a leading online provider of automotive aftermarket parts, including body parts, engine parts, performance parts and accessories. Through the Company’s network of websites, U.S. Auto Parts provides individual consumers with a broad selection of competitively priced products that are mapped by a proprietary product database to product applications based on vehicle makes, models and years. U.S. Auto Parts’ flagship websites are located at http://www.autopartswarehouse.com, http://www.partstrain.com and http://www.automd.com, and the Company’s corporate website is located at http://www.usautoparts.net.

U.S. Auto Parts is headquartered in Carson, California.

About Whitney Automotive Group

Established in 1915, JC Whitney & Co. is one the largest direct marketer of name-brand automotive parts and accessories, providing “everything automotive” with more than 1 million automotive applications from the latest model year back to the 1920s. JC Whitney offers products for virtually any vehicle — automobiles, trucks, motorcycles, and more — through its comprehensive family of general and vehicle-specific catalogs and on the online at http://www.jcwhitney.com.

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1 Comment

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