DieHard Brand Worth $200 Million to Eddie Lampert
Advance Auto Parts Inc. (NYSE: AAP) announced Monday that it had acquired the DieHard brand for $200 million in cash from Eddie Lampert’s Transform Holdco (aka Transformco), a company formed by Lampert and ESL Investments to hold Sears and Kmart stores and other assets out of bankruptcy. Advance said it made the purchase out of cash on hand.
Advance plans to replace its AutoCraft private label battery with DieHard brand and will be selling DieHard batteries at more than 6,000 locations, including its own stores, its Carquest subsidiary stores and on Walmart’s website, according to a report at the Chicago Tribune.
Sears launched the DieHard brand in 1967 after spending nine years and $1 million (real money in those days) developing the brand.
Advance CEO Tom Greco commented:
DieHard has the highest brand awareness and regard of any automotive battery brand in North America and will enable Advance to build a leadership position within the critical battery category. DieHard stands for durability and reliability and we will strengthen and leverage the brand in other battery categories, such as marine and recreational vehicles. We also see opportunities to extend DieHard in other automotive categories.
Under the agreement with Transformco, Advance has the right to sell DieHard batteries and extend the brand into other automotive-related channels. Advance did grant Transformco the right to an exclusive, royalty-free perpetual license to “develop, market, and sell DieHard branded products in non-automotive categories.”
While neither Sears nor Kmart is likely to plunge into new product development anytime soon, Advance had better keep an eye out for a successor company to Transformco that wants to develop DieHard-branded coffee, cigarettes or some other product.
Before its bankruptcy filing last year, Sears sold another of its iconic brands, Craftsman, to Stanley for $900 million. The last major brand in Transformco’s basket is Kenmore. Lampert offered to buy Kenmore last year for $400 million. Wonder if the brand will fetch that much when he tries to sell it now.
Advance stock gained about 1% on Monday and traded up about another 1% early Tuesday, at $161.45 in a 52-week range of $130.09 to $182.56. The 12-month consensus price target on the stock is $170.93.