MEMPHIS, Tenn.-Now that the handwriting appears to be on the wall for Big O Tires Inc., its acquisition by TBC Corp. must be transferred to paper. Ronald E. McCollough, Memphis-based TBC's senior vice president, said the company hopes to negotiate a definitive purchase agreement by mid-April.
That would be followed by a ``yay'' or ``nay'' vote by both companies' boards of directors, then a presentation to Big O's shareholders for ratification.
Just when the stockholders of Englewood, Colo.-based Big O will get to vote ``is still in the hands of the lawyers,'' Mr. McCollough said, though he assumed it would take place as soon after the boards' votes as possible.
Currently negotiating debt financing with various sources, TBC is hoping to close the entire deal and assume operation of Big O before June 30.
TBC's cash offer for Big O, one of North America's largest retail tire franchisers, stands at $16.50 per share, ``subject to some reductions based on limitations of expenses,'' Mr. McCollough explained. However, he said ``Big O's board has said they would not expect that reduction to be material, if any reduction.''
Initially, at least, the transition for Big O from an independent, publicly held corporation to a division of publicly held TBC should be relatively seamless.
``We expect (Big O President) Steve Cloward to remain as CEO,'' Mr. McCollough said, ``and that the majority of the Big O management team would stay in place.''
John E. Siipola and Horst K. Mehlfeldt, currently Big O chairman and vice chairman, respectively, will not stay with the firm.
Both companies are emerging from lackluster fourth quarter and annual financial performances. Still, TBC is expecting the addition of Big O ``to be accretive to our bottom line,'' Mr. McCollough said. ``There are synergies that will no doubt accrue to the combined entities, including purchasing, financial and operational.
``It's a good geographic fit for TBC, as well as Big O, and we bring financial and sourcing strength to them, and will be able to provide them with various lines of products they now can't get.''
While Mr. McCollough would not discuss TBC's ongoing strategy for Big O, he said TBC will study both companies' operations to see where it can find strategic, operational and financial opportunities.