Genuine Parts Co. is considering breaking up its business, exploring options to separate its industrial parts division from its automotive segment, according to a Bloomberg report citing people familiar with the matter.
The Atlanta-based company is evaluating scenarios that include a possible spinoff of its automotive parts business, which accounted for about 63 per cent of sales last year. The deliberations are still in early stages, and the company may ultimately decide to keep its current structure.
According to reports, the review follows a recent agreement with activist investor Elliott Investment Management. Earlier this month, Genuine Parts added two new independent directors — Courtney Carruthers, former president and CEO of TricorBraun, and Matt Carey, former executive vice president at The Home Depot — as part of a cooperation deal with Elliott. The appointments coincided with the retirement of two long-serving board members.
As part of the agreement, the company committed to reviewing “operational and strategic value creation initiatives.”
Marc Steinberg, a partner at Elliott, said during the board announcement that the firm sees untapped potential in Genuine Parts’ businesses.
“We believe the company’s current share price does not reflect the true value of its automotive aftermarket and industrial distribution businesses, and that there is a clear path to creating substantial, long-term value at GPC,” Steinberg said.
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