Acquisitions change retail tire landscape

AKRON — Mergers and acquisitions, which have become integral to any year's tire industry news recap for the past decade or more, went on steroids this past year, posting an unprecedented level of activity throughout 2021.

Over the past 12 months, Tire Business has tracked 50-plus separate transactions covering nearly 470 retail and/or commercial points of sale that changed hands.

The largest single deal overall was Goodyear's $2.5 billion takeover of Cooper Tire & Rubber Co., a transaction that pairs the No. 3 and 13 global tire makers and boosts Goodyear's annual sales by roughly $2.8 billion.

In the distribution sector, the largest single deals were Percheron Capital's purchase of American Tire Depot (101 stores) and Sun Auto Tire's acquisition of Plaza Tire (70 stores). Both were announced in late November.

These two entities — both controlled by private equity firms — were the most active in terms of transactions and points-of-sale acquired.

Percheron Capital — an unknown entity in the sector until late October — assembled a company with 149 outlets in three states via five transactions.

Sun Tire Auto, under the ownership of Leonard Green & Partners, a Los Angeles-based private equity group, has grown to over 350 points of sale via 13 separate transactions.

Monro Inc., whose basic business model is growth by acquisition, added 61 points of sale this year in six separate deals, the largest of which was its purchase of Mountain View Tire in March.

What's been slightly different this year, though, is the rising prominence of private-equity investors in this business sector.

There have been four prominent transactions involving private-equity firms:

• Percheron Investment Management L.P. has gone from zero to top 10 in a matter of a few months and a handful of transactions.

In business since 2020, San Francisco-based Percheron went from being the "silent" owner of California's Big Brand Tire — acquired without fanfare in April 2021 — to an enterprise that will rank among the eight largest retail tire and auto service dealerships in the U.S., according to Tire Business calculations.

In the space of just a few weeks late in the year, Percheron — under the Big Brand Tire umbrella — closed four acquisitions: Integrity Tire of Moorpark, Calif.; Tire World Inc. of Colorado Springs, Colo.; nine Purcell Tire retail outlets in Arizona; and American Tire Depot, the family-owned dealership with 101 outlets throughout California.

Co-founded by private-capital industry veterans Chris Collins and Chris Lawler — both veterans of Golden Gate Capital (the former part-owner of Mavis Tire) — Percheron Investment states its focus is on partnering with "high-quality essential services businesses."

• Leonard Green & Partners acquired majority ownership in September of Sun Auto Tire & Service Inc., the Phoenix-based automotive aftermarket retail business founded in 2017 by Greenbriar Equity Group Inc. Greenbriar retains a minority share.

The business, which changed its name to Sun Auto Tire from GB Automotive in June, has grown in the meantime to nearly 350 points of sale with the acquisitions of Bruce's Tire & Automotive (seven stores), Delta World Tire (17 stores), Plaza Tire Service (70 stores) and T.O. Haas Tire & Auto Inc. (27 stores).

• Investors led by Boston-based BayPine L.P. acquired majority ownership in March of Mavis Tire Express Service Corp., the Millwood, N.Y.-based enterprise that oversees a network of more than 1,100 locations spread across 27 states.

BayPine's partners in the deal are TSG Consumer Partners LP (TSG) and existing equity-holder West First Management (WFM), a holding company controlled by David and Stephen Sorbaro, co-CEOs of Mavis.

Mavis' lead financial partner, Golden Gate Capital, also retains a minority interest in the firm.

• Meritage Group L.P., a California- and New York-based investment group, bought controlling interest in Les Schwab Tire Centers, the nation's sixth largest independent retail tire dealership with 438 stores.

Meritage Group, a firm with assets under management in excess of $10 billion, took over Les Schwab from an owners' group comprising five generations of Schwab family members.

On the commercial side of the ledger, there were two deals of note:

• Kal Tire bought 15 GCR Tires & Service stores, two retread plants and one off-the-road (OTR) tire repair shop in eastern Canada from Bridgestone Canada Inc.

The deal covers GCR stores and retread plants in Newfoundland, Nova Scotia, New Brunswick, Ontario and Quebec, which serve consumer customers alongside the commercial trucking, OTR, agriculture and mining industries.

• Commercial tire dealer/retreader Wonderland Tire Co. of Grand Rapids, Mich., acquired Sumerel Tire Service Inc., the Newport Ky.-based retreader and developer of the AcuTread mold-cure retreading system.

The acquisition includes Sumerel Tire's commercial tire/retread plants in Bluffton, Ohio; Lebanon, Tenn.; and Newport.

Other major acquisitions worth noting:

• U.S. AutoForce, already one of the largest independent tire wholesalers in the U.S., acquired Treadmaxx Tire Distributors of Atlanta in October, strengthening its distribution footprint in the South/Southeast.

The deal added Treadmaxx's 14 warehouses in Alabama, Florida, Georgia, North Carolina, Ohio, South Carolina and Texas to Autoforce's existing network of 36 distribution centers in the Great Lakes/Upper Midwest, California, Texas and Florida.

• Reinalt-Thomas Corp. — d.b.a. Discount Tire/America's Tire — is acquiring Tire Rack Inc., the nation's largest direct-to-consumer online tire retailer and independent tire tester. The transaction is expected to close Dec. 31.

South Bend, Ind.-based Tire Rack was founded in 1979 as a mail-order tire and wheel business.

The company employs 950 at 10 distribution centers across the country.

The deal includes the ASAP mobile tire-servicing business that Tire Rack bought in the second half of 2020.