Interstate Batteries CEO Scott Miller, a big European football fan, often kicks a green soccer ball around the office while talking on his Bluetooth headset. After Tuesday's announcement, he might be kicking the ball a little harder. Jonathan Zizzo

Business

The End of the Affair

After touting a game-changing partnership to sell Interstate's batteries in Advance Auto Parts stores, the two companies say they're breaking up.

Earlier this year, an announced deal between Dallas-based Interstate Batteries and Advance Auto Parts was being hailed as the greatest partnership since Cleopatra and Mark Antony. Starting this summer, the companies explained, Interstate’s industry-leading car batteries would be sold exclusively in Advance’s vast network of retail stores, replacing the giant retailer’s private-label Auto Craft batteries. Virginia-based Advance would be getting a higher-quality offering than Auto Craft—its private-label battery has “low brand equity,” Advance CEO Tom Greco told me—and Interstate would be gaining access to nearly 5,000 retail outlets, up from the 200 company-owned stores that currently sell its batteries. The partnership would be a game-changer, Interstate said, boosting its annual revenue from $1.8 billion to $2.8 billion.

Then, something happened. Something bad, it seems. On Tuesday, Interstate and Advance surprisingly announced that their five-year deal was off before it even started. They didn’t say why things had soured, only that they no longer planned to be strolling hand-in-hand through the business park together. “The value envisioned by both parties was compelling, but circumstances changed,” Interstate CEO Scott Miller said in an email. “Challenges arose throughout the process, and … we wholeheartedly believed those would be resolved. Simply put, we could not reach an agreement where all stakeholders involved benefited.”

On an earnings call with stock analysts, Greco was only a little more forthcoming. “Whenever we engage with the supplier or a third-party external partner, we evaluate it in a pretty straightforward way,” Greco said. “We want to know where the consumer is headed, we want to know what’s best for our customers, and of course we put it through a financial lens that looks at sales, margin expansion, and cash flow. So in line with those financial priorities we decided not to proceed with the [Interstate Batteries] partnership because circumstances fundamentally changed since it was announced last December. So I’m going to leave it at that, other than to say that Interstate’s a great company with a great culture …”

Which sounds like the old breakup excuse, “It’s not you—it’s me.” Except, in a followup to Miller’s email, Interstate spokeswoman Christine Connelly sort of made it sound like it was Interstate that broke things off. “Unfortunately, we can’t go into details,” she said. “I can tell you the issues are complex, and we made this decision after examining many scenarios. Once it was clear the deal would not benefit all of our stakeholders, we couldn’t move forward.” So, who knows? Stuff happens, and at this point neither company’s talking straight. The partnership between Antony and Cleopatra didn’t work out so hot, either.

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