MEMPHIS, Tenn. (June 5, 2000) — TBC Corp. has purchased Florida-based Tire Kingdom Inc., one of the largest retail tire dealerships in North America, for $45 million in cash.
The acquisition marks TBC´s first major move into direct ownership of retail outlets. Primarily a marketer and distributor of private brand tires, TBC also owns Big O Tires Inc., which it purchased in 1996. However, all but 12 of the 457 Big O locations are operated as franchised retail centers.
Tire Kingdom, with headquarters in Riviera Beach, owns and operates 148 retail stores in leased locations, all but four of which are in Florida. The remaining outlets are in Charlotte, N.C.
TBC´s CEO Larry Day said acquisition of Tire Kingdom is consistent with the company´s intention to be ``a consolidator in a consolidating industry.´´ He added that TBC intends to expand the Tire Kingdom chain.
Background material provided in connection with TBC´s announcement said Tire Kingdom believes there is current potential to open 40-60 additional stores within Florida and contiguous states and that such expansion should require ``only a minimal additional investment in corporate infrastructure.´´
Mr. Day said Tire Kingdom will retain its Riviera Beach headquarters and retail identity in the marketplace. He said Tire Kingdom will offer TBC private label tires in addition to major brands.
Officials said no information was available regarding who will manage TBC´s newly acquired Tire Kingdom operations.
The dealership in 1999 recorded revenues of $224 million: about $192 million from its retail stores; the balance from wholesale sales. Tire Kingdom has approximately 1,600 employees and operates two primary distribution centers in Florida with a total of 205,000 square feet of space.
TBC said the $45 million purchase price was approximately equal to nine times Tire Kingdom´s 1999 earnings before income taxes, depreciation and amortization (EBITDA).
In a press release, TBC said it is financing the transaction, which closed June 5, primarily through bank borrowings and has increased its credit facility from $100 million to $133 million through a syndicate of banks led by Chase Manhattan Bank N.A.
TBC markets tires through its wholesale distribution operations under three proprietary brands—Multi-Mile, Cordovan and Sigma. The company also controls the Big O brand marketed through its Big O Tire subsidiary.
Together, these four brands account collectively for 7 percent of the replacement passenger tire market and 11 percent of the light truck tire sector.
In addition to purchasing Big O four years ago, TBC in 1998 acquired Atlanta-based Carroll Tire, one of north America´s largest regional private brand tire distributors. Earlier, the company purchased Northern States Tire Inc., a wholesale distributor based in Lebanon, N.H., in 1995.