TORONTO—Goodyear Canada Inc. plans to acquire a 49-percent stake in Beverly Tire—one of Ontario's major commercial and off-the-road tire dealerships—shoring up Goodyear's market presence in southern Ontario. The new partners already are setting the stage for growth, announcing plans for a 25,000 unit-per-year truck tire retreading plant in Ontario during 1999, quadrupling Beverly Tire's existing capacity.
The deal, expected to close during January, will represent a shift in market presence in Ontario; up to now, Michelin North America Inc. has been Beverly Tire's primary tire supplier.
Goodyear announced Jan. 5 it would purchase 49 percent of privately owned Beverly Group Inc., which does business as Beverly Tire, for an undisclosed amount. Founded in 1974, Beverly Tire has 12 locations in Ontario, including one retread shop. The company, based in Flamborough, near Hamilton, Ontario, projects sales of about $22.8 million (U.S.) for the fiscal year that ends in May.
John Howard, Goodyear Canada's vice president of the central region, said the company was looking to fill some gaps and increase commercial and OTR sales in southern Ontario. ``We're really looking for additional support for distribution in the south,'' he said.
For Beverly, the agreement represents an opportunity to grow in the direction it wants. ``We are looking for significant gains in the commercial side,'' said Jim Bethune, Beverly senior vice president.
Mr. Howard said the deal had been in the works for a couple of months.
This marks the second time Goodyear Canada has purchased such a large minority interest in a dealership chain.
The tire maker owns 49 percent of 88-outlet Fountain Tire Corp., based in Edmonton, Alberta., and last year provided an undisclosed amount of support to Coast Tire & Auto Service Ltd. of St. John, New Brunswick, in Coast's purchase of Martime Tire Ltd., an eight-store chain also based in St. John.
Mr. Howard said the strategy of becoming an equity partner holding less than a majority interest recognizes the entrepreneurial efforts of Beverly's original owners. ``They've built the business to the level and success that it has, and we want to keep those individuals there,'' he said.
Mr. Bethune said he's excited about the future direction of Beverly with the backing of its new partner: ``We expect between 5 and 8 percent growth in our stores, and we are looking for some significant gains in the commercial side in particular.''
Mr. Bethune said Beverly expects to significantly increase its commercial retread business as a result of the deal. ``We're going to step into retreading in a big way,'' he said.
Beverly now produces about 25 retreads a day.
The technology available from Goodyear was also a big plus, Mr. Bethune said. ``The training is huge for us. Our approach is very long-term in how we want to go to market.''
Mr. Howard said Goodyear will provide the sales, product and personnel development training to Beverly's 140 employees. They'll have access to several Goodyear programs that provide customized data and sales presentations for commercial fleet clients.
These computer software packages also can be used to help commercial operators get a true picture of their tire costs, incorporating both new tires and retreads.