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U.S. Auto Parts Network: Potential Acquisition Target

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Summary

This is the second part of U.S. Auto Parts Network analysis.

Recent M&A activities hot up in the aftersales market.

U.S. Auto Parts Network provides an established online channel for pure bricks-and-mortar competitors.

The company trading at a fantastically cheap price for a buy-out.

Although with operation inefficiencies, in better hands, this could be a great acquisition target.

This is the second part of the analysis of U.S. Auto Parts Network Inc. (PRTS), it lays out a more speculative scenario where PRTS is proposed as a potential acquisition target. Please, read Part I for the background and fundamental analysis of the company.

PRTS as a potential acquisition target

Evaluating PRTS and the industry revealed to us that the company is, in fact, a great acquisition candidate. The main reasons are thanks to the highly active M&A activities in recent years, especially from a particular billionaire - Carl Icahn, and what PRTS can bring to the table. However, we need to remind investors that the opportunity that PRTS can be sold for a premium is purely speculative.

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Recent M&A activities

As we have alluded to you in the first part of the analysis that even though new cars are coming in slower to the market, we must not forget that older cars are on the road for longer, and these owners are also spending more than ever to maximize the lifetime value of their vehicles. This rising demand for aftermarket parts and services is spurring new growth and revenue opportunities for a wide range of businesses operating in the automotive aftermarket industry.

The last few years saw many M&A activities. Most recently, Parts Authority, the US automotive and truck parts company agreed to acquire Interamerican Motor Corporation, a leader in European and Asian branded replacement parts, from AutoZone (NYSE:AZO) in February 2018. The deal allows Parts Authority to expand product offerings, customer touch points, and geographies.

Source: https://seekingalpha.com/article/4168025-u-s-auto-parts-network-potential-acquisition-target

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