Advance Auto Parts, an aftermarket retailer of automotive parts with over 3700 stores and a $5.2 billion market value, has hired Blackstone to explore a sale of the company, according to people familiar with the situation.
The process is in relatively early stages and is largely confined to private equity firms that have previous expertise in retail.
Bankers tell me at least three of the larger private equity firms are engaged in the exploration of bids and have sounded out banks to see what type of leverage could be arranged to finance any deal. (Read More: Europe's Private Equity Firms Look Elsewhere)
Advance Auto is currently levered at about 2.5 times and bankers tell me debt could be taken up to as much as 5.5 or even 6 times EBITDA.
Any deal would be expected to come in at a premium that would bring the price tag to over $6 billion, making it one of the larger leveraged buy outs to be done since the financial crisis. (Read More: Inside America's Economic Crisis)
As such it would also require a fairly large equity check of as much as $1.3 billion, which could require two private equity firms to join forces for a bid or for them to raise additional direct investment from their limited partners.
It is still early in the sale process and there is no guarantee the current process will result in a sale. Advance Auto reported disappointing earnings on Oct. 22 for its third quarter as comparable store sales declined by 1.8 percent.
Sources tell me the company initiated the exploration for a buyer after reporting that quarter. The company expects to earn between $5.05 and $5.15 a share for 2012.
A company spokeswoman has not returned calls.
—By CNBC's David Faber