Southland Corp. said Thursday that it has agreed to sell Chief Auto Parts to the subsidiary's management and Shearson Lehman Bros. for more than $130 million in cash and the assumption of certain liabilities.
"We're delighted with the price, as well as the buyers," Jere W. Thompson, president and chief executive of Southland, said in a statement.
Southland did not reveal how much more than $130 million will be paid, the size of the liabilities to be assumed or how the transaction will be financed. Southland and Chief officials were not available for further comment Thursday.
Chief Auto Parts, the nation's largest auto parts retailer operating under one name, was put up for sale in July along with several other subsidiaries to help pay for the leveraged buyout of Southland Corp. Thompson said several "qualified parties expressed strong interest" in the 470-store chain. In September, the Haft family of Washington said it planned to make an offer for Chief to augment its Trak Auto chain.
Southland bought Chief in 1978. At that time, the chain had only 119 stores.
Thompson said Chief's "senior management team and employees have done an outstanding job as part of Southland, and we are so very pleased that, with Shearson as a co-investor, they will be able to continue their success."
At the end of last year, Chief's 475 stores had average sales of $555,000, said Chuck Laverty, editor of Automotive Week magazine. The chain is profitable "but apparently only in the past year or two," he said. Southland does not routinely disclose Chief's financial results.
The automotive parts business is extremely competitive with 18 different types of retail outlets, including grocery stores, discount chains and car washes, selling the parts, Laverty said. "So the margins are getting slimmer and slimmer all the time."
Pep Boys is the most successful of the chains, with a huge inventory of parts and automotive service at many of its stores, Laverty said. "When you go to a smaller chain you may or may not get what you're looking for, and that tends to drive you to the guys that have it all the time, which is Pep Boys," he said.