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Genuine Parts and Essendant Merger Deal Under Notice

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Genuine Parts Company (GPC - Free Report) has reported that Essendant, Inc. intends to terminate the merger agreement, which both the companies entered in April 2018. Per the signed agreement, Genuine Parts announced the spinoff of its wholesale distribution business, S.P. Richards and the plan of combining it with Essendant. However, a recent notice sent to Genuine Parts states that Essendant's board has decided to accept the acquisition proposal offered by Staples, Inc. Per the board members of Essendant, Staple’s proposal is a "Superior Proposal" as mentioned in the merger agreement.

Slated to close by the end of 2018, the merger between Essendant and Genuine Parts’ wholesale distributor would have valued S.P. Richards at about $680 million. Further, Genuine Parts would have received $347 million in cash while shareholders of the company would own around 51% of the combined company, post closing.

Per the merger agreement, Genuine Parts has a three-day period to match the offer. During the period, the company intends to assess its rights in the existing agreement. However, it considers the agreement to be a superior one and won’t offer any counterproposal. After the deal termination, the company will receive a termination fee of $12 million from Essendant.

Genuine Parts Company Price and Consensus

 

Per management, Genuine Parts is confident in its ability to develop the business of S.P. Richards and generate profit. The company also believes that its business products segment has good prospects through collaborations with both independent dealers and other customer channels.

Price Performance

In the past six months, Genuine Parts’ stock has gained 10.2%, outperforming 2.3% increase recorded by the industry it belongs to.

 

 

Zacks Rank & Key Picks

Genuine Parts currently carries a Zacks Rank #3 (Hold). A few better-ranked stocks in the auto space include Allison Transmission Holdings, Inc. (ALSN - Free Report) and Fox Factory Holdings, Inc. (FOXF - Free Report) , both currently sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Allison Transmission has an expected long-term growth rate of 10%. Shares of the company have risen 34.2% in the past six months.

Fox Factory has an expected long-term growth rate of 16.8%. Over the past six months, shares of the company have gained 89.5%.

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