Mega-merger: Mavis adds 595 locations with TBC deal

PALM BEACH GARDENS, Fla. — In an era when mergers and acquisitions have become routine, this one is historic.

TBC Corp. sold its retail holdings — 595 stores in 15 states — to Mavis Tire Express Services Corp. in late May in what's considered the largest transaction in the U.S. tire aftermarket in the past quarter century.

The deal, for an undisclosed sum, covers 203 Tire Kingdom Service Center locations in Florida and 392 NTB Tire & Service stores in the mid-Atlantic, Midwest and South, including Texas, expanding Mavis' retail holdings to nearly 2,000 stores across 25 states.

The deal includes provisions for TBC to provide wholesale tire distribution for Mavis retail locations, strengthening TBC's already extensive wholesale business.

The acquisition "represents a significant milestone in the continued acceleration of Mavis's growth strategy," Stephen Sorbaro, co-CEO of Mavis Tire Express, said, "enabling us to deepen our presence in existing markets and expand our Mavis brand into new markets throughout the Midwest, mid-Atlantic and in Texas.

"We have a strong working relationship with TBC and a history of successfully integrating NTB locations into our platform, and we look forward to partnering with them again to welcome the talented NTB and Tire Kingdom teams to the Mavis family."

This deal is the second such transaction between TBC and Mavis in the past few years. In 2020, Mavis acquired 112 NTB stores in four major metropolitan areas — Atlanta, Boston, Chicago and Philadelphia — from TBC and later converted them to Mavis Tire signage.

This time, Mavis has indicated it will maintain the NTB and Tire Kingdom brands, for the foreseeable future at least.

"From our perspective, the Tire Kingdom and NTB names have strong awareness and brand equity," Mavis Co-CEO David Sorbaro told Tire Business. "With that in mind, we have not made any long-term branding decisions as of yet."

The acquisition is considered primarily complementary for Mavis, extending the Millwood, N.Y.-based dealership's footprint into four new states — Maryland, Ohio, Virginia and West Virginia — and expanding its presence markedly in Florida, North Carolina, South Carolina and Texas.

David Sorbaro also noted there are "no areas of extreme overlap, so other than typical pruning of changing retail trade areas, I do not see significant consolidation."

All NTB and Tire Kingdom retail store and retail field management associates were given the opportunity to continue their careers with Mavis, the parties said.

While Mavis Tire lists 1972 as its founding year, it has roots as far back as 1949 as a bicycle repair shop owned and run by Vic and Marion Sorbaro. The Mavis name derives from a combination of their names: MArion and VIc Sorbaro.

While the companies did not disclose terms of the deal, it's significant to note that Mavis Tire took on another private-equity partner in connection with the transaction, and that proceeds from the investment were used to facilitate closing the deal.

The undisclosed investment was made by several client portfolios managed by NB Alternatives Advisers L.L.C., a unit of New York-based Neuberger Berman, Neuberger Berman Alternatives, an employee-owned investment management concern.

NB Alternatives joins a quartet of existing investors in the 51-year-old dealership. Boston-based BayPine L.P. bought into Mavis in March 2021 in partnership with TSG Consumer Partners L.P. and West First Management (WFM), a holding company controlled by David and Stephen Sorbaro. Golden Gate Capital, a former primary investor, retains a minority interest.

J.T. Munch, managing director, Neuberger Berman Alternatives, said: "We have long admired the company and believe Mavis' demonstrated track record of high-quality service will continue to be valued by customers in the years to come."

In terms of assets that traded hands, the deal ranks as the largest transaction in the retail tire business in the U.S. in the past 25-plus years. Only Penske Corp.'s takeover of 860 Kmart auto centers in 1995 ranks higher. That venture, however, lasted only seven years before Penske pulled the plug in early 2002 on its Penske Auto Centers business.

It also marks the fifth major acquisition in the past eight years for Mavis Tire Express, and one that will grow the company's retail footprint to nearly 2,000 stores in 25 states, predominantly along the Eastern Seaboard, throughout the Northeast/New England, Upper Midwest and the Southeast/Gulf Coast.

Tire Business estimates the TBC retail business generates roughly $2 billion in annual revenue. Mavis does not disclose its sales or other financial information.

For TBC, the deal could mean hundreds of millions — if not billions — of dollars in new revenue through its wholesale arm as well as a major new client for its private-brand business unit.

"Divesting our company-owned retail business allows us to focus and strengthen our wholesale business, pursue growing our distribution and 'supply chain as a service' solutions," TBC President and CEO Sam Kato said, "while bolstering our market-leading Midas and Big O Tires franchise businesses."

It's unclear how the deal will affect TBC's finances. In fiscal 2022, the Palm Beach Gardens-based company reported sales of $5.56 billion, up 18.1% over 2021, but suffered a 13.1% drop in pre-tax operating income, lowering the operating ratio to 5.3%, according to figures published by TBC co-owner Michelin Group.

"As we execute our growth plans and strategies, we continuously analyze the assets in our portfolio and periodically fine tune them to drive superior performance in our core focus areas," according to Kato, who was named TBC's top executive in March.

"We have never been in a stronger position to offer best-in-class solutions that address a full range of customer priorities while driving innovation and long-term sustainable growth."

Kato added, "It was important to us to identify a buyer with an exceptional people-centric culture that aligns with our company values.

"From our long-term partnership with Mavis, we are confident they are well-positioned to accelerate growth in the NTB and Tire Kingdom businesses as they continue to invest in expanding Mavis's national footprint."

The divestiture ends a 23-year chapter in TBC's history.

The company was established in 1956 as a buying group known as Cordovan Associates. The Dayton, Ohio-based enterprise acquired Big O Tires in 1966 and morphed into Tire & Battery Corp. in 1972.

It branched into retailing in 2000 with the purchase of Tire Kingdom and expanded three years later by acquiring National Tire & Battery (NTB) from Sears, Roebuck & Co.

TBC is considered one of the largest wholesale distributors in the U.S., with 144 wholesale distribution centers throughout the U.S. operating under the National Tire Wholesale umbrella.

It also will continue to exercise influence in the retail tire and auto service sector through its Big O Tires and Midas International franchise businesses. At last count, there were nearly 1,200 Midas and 470 Big O Tires points of sale throughout North America, generating an estimated $2.75 billion in revenue collectively.