Virginia

Starboard buys minority stake in Advance Auto Parts

NEW YORK (AP) — Starboard Value LP has purchased a minority interest in Advance Auto Parts and says that it believes the auto parts retailer is undervalued.

Starboard, which is known to be an activist investor in businesses in which it takes a stake, disclosed that it owns about a 3.7 percent interest in Advance Auto Parts, which is based in Roanoke, Virginia.

In a letter to Advance Auto Parts CEO Darren Jackson, Starboard said that it believes the company can boost its stock price to more than $400 per share — more than double its current level — by improving margins and working capital, realizing the value of Worldpac and putting in place a daily delivery program to help increase commercial sales. Worldpac is a brand that Advance Auto Parts obtained when it closed on its acquisition of General Parts International Inc. last year.

On Tuesday Starboard urged Media General, another company in which it owns a minority stake, to accept Nexstar Broadcasting Group Inc.’s $1.9 billion buyout offer and to drop its $2.4 billion pursuit of Meredith Corp.

Shares of Advance Auto Parts Inc. gained $11.17, or 6.6 percent, to $181.70 in Wednesday premarket trading about 30 minutes ahead pf the market open.

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