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O’Reilly CEO Greg Henslee
O'Reilly Automotive CEO Greg Henslee Talks about the Recent Acquisition of CSK Auto
O’Reilly Automotive recently signed a definitive merger agreement with CSK Auto Corp., to acquire the company for approximately $1 billion. Shortly following the announcement, O’Reilly CEO Greg Henslee shared with aftermarketNews some preliminary details of this important acquisition.
By Amy Antenora
What made CSK an appealing acquisition for O’Reilly? What do you feel are CSK’s biggest assets?
We have a history of successful acquisitions so we understand what
type of company makes the best fit for O’Reilly and how to integrate
its people and processes into our company to make it stronger. Building
upon the foundation of CSK’s strong Western presence and O’Reilly’s
Midwestern and Southeastern presence, we believe the combined company
will be positioned to further leverage O’Reilly’s strong dual market
strategy and CSK markets.
What broad-based services currently in place at CSK do you
see as most valuable (e.g, real estate/store locations, customer
service center/call center, distribution centers, merchandising
strategies, wholesale business)?
O’Reilly and CSK maintain highly complementary business models in
two distinctive regions of the country. Acquiring CSK will give
O’Reilly a national platform and will allow further expansion into
other geographical regions throughout the country.
CSK has a strong brand reputation, particularly on the
West Coast. Would it be O’Reilly’s intention to re-brand these stores
to O’Reilly (as was the case with Hi/LO and Discount Auto)?
We have always had a great amount of respect for CSK and the brands
that they have established over the years. Consistent with our
practices with previous acquisitions, ideally, we would plan to convert
those brands to O'Reilly.
Part of our plan with CSK is to evaluate the effectiveness of their
current brands and the markets in which they operate. We will then
determine whether it makes sense to consolidate the CSK brands into
O'Reilly. As has been our policy with past acquisitions, we plan to
dual brand for some time and then transition the stores in phases to
the O'Reilly brand.
Since the O’Reilly footprint doesn’t overlap very much
with CSK, will we see any major distribution center closings or
realignments? If so, where?
We are not ready to announce a final plan on what we will do to
enhance the distribution network. There is still a detailed analysis
that has to be done to make our final determination, but we're
relatively confident that the majority of the current CSK distribution
centers are in locations that would be suitable to our business plan.
Part of the successful execution of our dual-market strategy is having
an intensive distribution network and access to parts that it takes to
service the installer customers and the professional side of the
business, so over time our plan would be that we would further enhance
CSK’s distribution network in order to better serve the wholesale
In the few months that O’Reilly has been working to
acquire CSK Auto, what have you learned about the company’s culture,
and how do you anticipate merging the CSK culture with O’Reilly’s
culture, since both are so well-defined? What have you learned from
similar previous acquisitions such as Hi/LO and Discount Auto?
We have great respect for CSK and its management team. As you may
know, at O’Reilly, we have had a lot of success in implementing our
dual-market strategy in our current stores. Our plan is to smoothly
integrate the two companies and use the best of both O’Reilly and CSK
to make a stronger combined company, which includes executing our
dual-market strategy in the western half of the United States.
Outside of this acquisition are there additional plans to grow O’Reilly’s national footprint?
With consideration to the integration of the CSK stores to our
model this year, we plan to reduce our new store openings in 2008 to
somewhere in the range of 140 to 150 stores from 205, which is what we
previously announced. Toward the end of the year, we will evaluate
where we stand and make an announcement for 2009.
Can you tell us how management will be structured once the
acquisition is complete -- with respect to the leadership team
currently in place at CSK?
We are still in the process of evaluating our integration plans for
CSK. What I can tell you is that this transaction is about growth and
improving our competitive position. There will always be places for
good people in the combined company and we believe much of the value of
this combination will come from improvements in our business, rather
Previous information suggested that your initial bid for
CSK was somewhere in the $8 per share range. The official announcement
today (April 1) regarding the pending acquisition places the purchase
price in the range of $11 to $12 per share. Any comments with regard to
the difference in price and the value this brings to the shareholders
of both companies?
As you may know, prior to our entrance into our Standstill
Agreement with CSK, we publicly expressed our strong desire to evaluate
non-public information that would allow us to refine our preliminary
offer price. After a thorough and extensive analysis, our board of
directors concluded that this transaction will generate significant
value for the combined companies’ stockholders, growth opportunities
for team members and enhanced service to our customers.