ENGLEWOOD, Colo.-Ballyard philosopher Yogi Berra said ``it ain't over 'til it's over.'' And it appears the continuing saga of Big O Tires Inc.'s acquisition isn't over yet. While a leveraged buyout (LBO) of the tire franchiser by a dealer/management group speeds toward finality, on Jan. 22 the group made a joint announcement with Memphis, Tenn.-based TBC Corp. that TBC is looking at the possibility of buying Big O.
The move came as somewhat of a surprise. Big O's annual dealer meeting, scheduled for Feb. 11-14 in Las Vegas, is fast approaching, and for some time company officials were saying the final touches on the LBO were nearly in place, with a done deal expected-if not in time for the meeting-early in the year's first quarter.
Both companies acknowledged that representatives of the dealer/management group-which is led by Big O President Steven P. Cloward-has had initial discussions with TBC and that TBC has already begun a typical due diligence review of Englewood-based Big O's financial history.
Ronald E. McCollough, a TBC senior vice president, told TIRE BUSINESS: ``This is strictly a preliminary discussion about whether we would want to make an offer for Big O. There is no commitment on our part to do that, and no commitment from (the Cloward group) should we make an offer.''
TBC has not indicated any price for the potential acquisition. The Cloward group's LBO is set at a cash price of $16.50 per share, or about $54.7 million.
However, were a deal to be put together by TBC, the marketer and distributor of automotive replacement market products would buy Big O outright, Mr. McCollough stated, rather than enter as a partner or minority owner.
And though the subject has not been discussed, he said he assumes TBC would keep the Big O name, which in itself has great market value as one of the nation's largest automotive services franchisers with about 385 stores.
As far as a time frame for acquisition, Mr. McCollough said TBC has none, though ``obviously, since the LBO is still on track, we know there's some timetables involved with that. But . . . we'll do this with care and, if we decide to go further, we'll do that when we feel comfortable.''
The LBO going through won't necessarily preclude TBC from still buying Big O, though Mr. McCollough admitted if that happens, ``at that time then we have a decision to make, and would take the appropriate actions, whatever the circumstances are.''
Big O Vice Chairman Horst K. Mehlfeldt said, to his knowledge, TBC initiated contact with the dealer/management group late last December through BOTI Holdings Inc., the acquisition corporation set up by the group.
He doesn't know what effect TBC's overture will have on the LBO because ``we currently not only have an offer (from the Cloward group), but we have a valid signed, definitive merger agreement which is legally valid until the end of February.
``Until I hear to the contrary, that is a valid contract and we will honor it,'' he continued.
Mr. Mehlfeldt, along with Big O Chairman John E. Siipola, are not part of the group of senior Big O executives involved in the LBO.
Publicly-held Big O has already filed its initial draft of proxy material on the LBO with the federal Securities and Exchange Commission, and is almost ready to send a revised proxy and additional material requested by the Securities and Exchange Commission.
However, Mr. Mehlfeldt said BOTI has asked that the company hold off refiling the information while discussions with TBC continue.
After the filing, the next step would be a shareholder meeting where a vote for or against the LBO would take place.
If ratified, a cash transaction would follow.
If TBC, primarily a wholesaler, were to buy Big O, it would not be its first foray into retailing, nor would it necessarily be a radical change in direction for the company, Mr. McCollough said.
Late last September, TBC acquired Northern States Tire, which operated two retail stores, a primary warehouse facility in Lebanon, N.H., a smaller warehouse in Brockton, Mass., and a retread plant in Lancaster, N.H.
Buying Big O ``would be somewhat of a change,'' he said, ``but not really a change in direction, in the true sense, in that Big O is a wholesaler. Their customer base is principally their franchisees, who are in the retail business.''
On the other hand, Mr. McCollough said more than 50 percent of TBC's present customer base consists of wholesale distributors.
Although its sales to retail chain stores or independent tire dealerships ``is somewhat less than through our wholesale distribution,'' he said TBC has ``a very large retail dealer customer'' in Prineville, Ore.-based Les Schwab Tire Centers Inc., the nation's second-largest independent retail chain, according to a TIRE BUSINESS ranking.
Mr. Mehlfeldt said TBC has implied that buying Big O ``would be a good fit, from a strategic point of view,'' and from what he's seen of TBC in the past, ``and their desire to get a little closer to the retail customer, it makes sense to me.''