O'Reilly Automotive's (ORLY) potential acquisition of Genuine Parts' (GPC) automotive business, which operates under the NAPA brand, at a valuation of $10 billion or more could provide greater scale and geographic reach, though the strategic merits remain unclear, UBS Securities said.

While analysts said it is not yet clear whether the deal would make strategic sense, they noted that O'Reilly's track record as a value buyer suggests it would likely be disciplined on price.

The potential merger could help realize some purchasing benefits and better performance for the NAPA business through supply chain extension in the acquired locations, the investment firm said in a Thursday note.

The deal could be relatively more complicated because a merger could result in O'Reilly having to close a significant number of US stores due to the geographic overlap between NAPA and its stores given potential FTC concerns, according to the note.

UBS has a buy rating on the stock, with a price target of $120 per share.

Shares of O'Reilly Automotive were down more than 7% in Monday trading.

Price: 83.77, Change: -6.49, Percent Change: -7.19