CITY OF COMMERCE, Calif.-The attempt by tire retailer AKH Co. Inc. to purchase Big O Tires Inc. has proceeded to the next step in the process, with both companies entering into mutual confidentiality agreements and beginning an exchange of information. Next on the agenda is the initiation of due diligence which, according to AKH's general counsel, Leon Alexander, should be conducted by month's end.
As reported in the Nov. 14 issue of TIRE BUSINESS, AKH, which is based in City of Commerce, has made an undisclosed cash offer to purchase publicly held Big O.
The deal is subject to major contingencies, including obtaining financing, satisfactory completion of due diligence and negotiation of a mutually satisfactory acquisition agreement.
AKH operates 125 retail outlets in California, Oregon, Washington and Utah under the names Discount Tire Centers, Evans Tire & Service Centers and David Early Tires. Englewood, Colo.-based Big O has about 370 outlets in 18 states and 41 associated dealers in British Columbia.
AKH President Andy Andonian announced the firm has retained Chriss Street of Chriss Street & Associates, an investment banking firm in Corona Delmar, Calif., which will be financial adviser to AKH in the negotiations. Paine Webber Inc. represents Big O.
Mr. Street did not return phone calls for additional information.
Following completion of due diligence, Mr. Alexander said AKH's board would likely ``review the numbers,'' then work out terms of the company's purchase proposal.
A statement from Horst Mehlfeldt, Big O's Investment Committee representative, said ``several confidentiality agreements have been requested through the company's investment banker, and the process of evaluating alternatives to enhance the values of the company is proceeding.''