NEW YORK, Sept. 30, 2015 /PRNewswire/ -- Starboard Value LP
(together with its affiliates, "Starboard") today announced that it
has acquired a 3.7% ownership stake in Advance Auto Parts,
Inc. (NYSE: AAP) ("Advance" or the "Company"), and has released a
presentation on Advance that it will be making at today's C4K Sohn
Canada Conference 2015 in Toronto. Starboard also announced
that it has delivered a letter to Darren R.
Jackson, the CEO of Advance, and to Advance's Board of
Directors (the "Board").
The presentation that Starboard will be making at the C4K Sohn
Canada Conference 2015 is available for viewing at the following
link:
http://www.starboardvalue.com/publications/Starboard_Value_LP_AAP_Presentation_09.30.15.pdf
The full text of Starboard's letter to the CEO and the Board
follows:
September
30, 2015
Advance Auto Parts, Inc.
5008 Airport Road
Roanoke, VA 24012
Attn: Darren R. Jackson, Chief
Executive Officer
cc: Board of Directors
Dear Darren,
Thank you for taking the time to meet with us earlier this
month. Our discussion was helpful for us in gaining a better
understanding of Advance Auto Parts, Inc. ("Advance", or the
"Company"), its challenges, and its opportunities. As you
know, we have conducted extensive research on Advance and the
aftermarket auto parts industry. We believe that the current
market price of Advance does not fully reflect the value of its
businesses and that opportunities exist within the control of
management and the board of directors of the Company (the "Board")
to create substantial value for all shareholders. We look
forward to continuing our discussions with you regarding these
opportunities.
Starboard Value LP, together with its affiliates ("Starboard"),
currently has an ownership interest of approximately 3.7% of
Advance, making us one of the Company's largest shareholders.
Later today, we will be discussing Advance at the C4K Sohn Canada
Conference 2015, where we will outline our views as to why Advance
is undervalued and the opportunities we see for substantial value
creation. In our presentation, we discuss how Advance's
operating margins are approximately 800-900 basis points below its
closets peers, O'Reilly Automotive and AutoZone, and our belief
that Advance can close the bulk of that gap over the next several
years by implementing a series of operational improvements.
Despite this tremendous margin improvement opportunity and a
best-in-class business mix, Advance currently trades at an
approximately 2-5 turn discount to its peers on an EBITDA multiple
basis.
We believe that Advance can achieve a share price of more than
$350 by implementing a comprehensive
margin improvement program, together with additional value creation
opportunities, including substantial working capital improvements,
realizing the value of Worldpac, and implementing a daily delivery
program to drive commercial sales. Moreover, if Advance
realizes margins and multiples in line with O'Reilly, which we
believe is achievable, its stock could be worth well over
$400.
We believe Advance's tremendous operational improvement
opportunity, combined with its discounted trading multiple, makes
Advance an extremely compelling investment opportunity, and
therefore have chosen to discuss Advance at the conference.
Since the conference materials will be public, but may not be
widely disseminated, we have included them as an attachment to this
letter, so that you and the Board, as well as all shareholders of
the Company, can understand our view of this compelling opportunity
for Advance.
We look forward to continuing our constructive relationship.
Best Regards,
Jeffrey
C. Smith
Managing Member
Starboard Value LP
About Starboard Value LP
Starboard Value LP is a New
York-based investment adviser with a focused and fundamental
approach to investing in publicly traded U.S. companies. Starboard
invests in deeply undervalued companies and actively engages with
management teams and boards of directors to identify and execute on
opportunities to unlock value for the benefit of all
shareholders.
Investor contacts:
Peter
Feld, (212) 201-4878
Gavin Molinelli, (212) 201-4828
www.starboardvalue.com
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SOURCE Starboard Value LP