Why AutoZone Stock Plunged by More Than 6% Today

A media report that hit the headlines just before the stock market took a break for Independence Day was weighing on investor sentiment toward AutoZone (AZO 6.38%) shares on Monday. The prominent auto retailer's stock fell by more than 6% after a financial news agency reported that two rivals might soon combine.

A Genuine offer?

That report, published in Bloomberg and citing unidentified "people familiar with the matter" as sources, said O'Reilly Automotive made a buyout offer for Genuine Parts' auto parts distribution arm. The deal could be valued at $10 billion or more; those sources were not more specific about the financials. They did say it was an all-cash bid.

Image source: Getty Images.

Neither O'Reilly nor Genuine Parts has officially commented on the story.

Genuine Parts is best known for the brand behind the distribution business, Napa. This unit is considerable, with 10,000 retail locations here and abroad, and over $15 billion in sales in 2025, and would be quite the addition for O'Reilly. Earlier this year, Genuine Parts announced it was working with advisors to separate Napa and its industrial parts businesses.

The article's sources said that a potential deal could be announced as early as the end of this summer. There's no guarantee one will happen, however, and Genuine Parts could decide to keep ownership of the distribution unit.

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NYSE: AZO

AutoZone

Today's Change

(-6.38%) $-201.57

Current Price

$2957.71

Key Data Points

Market Cap

$52BMarket cap calculated using publicly traded shares outstanding only. Does not include unlisted, private, or dual-class non-traded shares. Implied market cap may vary.Market cap calculated using publicly traded shares outstanding only. Does not include unlisted, private, or dual-class non-traded shares. Implied market cap may vary.

Day's Range

$2949.43 - $3150.10

52wk Range

$2928.11 - $4388.11

Volume

339.3K

Avg Vol

368.3K

Gross Margin

51.75%

Moving parts

This story is entirely believable, as Genuine Parts as a whole has seen pronounced downward momentum with its share price at times over the past few years. Also, O'Reilly has not been shy about pursuing acquisitions for growth; Bloomberg noted that it spent roughly $1 billion to acquire CSK Auto in 2008.

I always advise against buying or selling a stock on takeover speculation, and that goes for AutoZone, O'Reilly, and Genuine Parts. While this report feels realistic, even if O'Reilly does strike a deal with Genuine Parts, it might encounter legal speedbumps due to antitrust concerns.