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.