GREENSBORO, N.C.—Snider Tire Inc. has signed a letter of intent to purchase Cate-McLaurin Co. Inc., a single-location commercial tire dealership and retreader in Columbia, S.C. The acquisition gives Greensboro-based Snider Tire its first presence in South Carolina, and its 13th location overall.
Terms of the transaction, expected to close July 1, were not disclosed.
Cate-McLaurin has an excellent reputation in the market, said John Snider, president of Snider Tire. "This gives us some service capabilities in an area where we heretofore didn't have any."
Cate-McLaurin will retain its own name, and brothers Charlie Cate, 61, and Billy Cate, 56, who have been the principal co-owners, will continue to operate the dealership.
"As far as product mix and the way they go to market, we intend to leave it alone," Mr. Snider said.
Charlie Cate and Mr. Snider both said the two companies have similar cultures and values. Both are family businesses being run by second-generation leadership.
Charlie Cate said Snider Tire first approached him about selling the dealership in late 1998. At that time, he and his brother rejected the offer.
But the overture caused the Cates to consider the long-term future of the dealership. Consolidation and expansion by other commercial dealerships and outsourcing of tire services by regional and national trucking fleets were major concerns.
"They (trucking companies) don't want you to take care of their business in a single location," Mr. Cate said. "They want you to take care of them on a regional basis."
"I couldn't see a bright long-term future for a single-location dealership such as ours," he said.
Mr. Snider approached the Cates again earlier this year, and this time a deal was struck. "My brother and I came to the conclusion that there was a perfect fit between us and Snider," Mr. Cate said.
With 360 employees at 12 commercial tire centers and seven retread plants in six states, Snider Tire racked up sales of $66 million in 1999—good for ninth place in Tire Business' ranking of North America's largest commercial tire dealerships.
The company produces about 900 Bandag medium truck retreads per day and is tied for 11th place among the continent's truck tire retreaders.
Cate-McLaurin has 82 employees at its single location in Columbia and had sales of more than $13 million in 1999. Its Bandag retread plant produces nearly 250 medium truck retreads daily.
The Cates' father, Charles J. Cate Jr., founded the dealership in 1932 by selling and changing tires on the street in front of a sporting goods store.
The senior Mr. Cate took on J.W. McLaurin as a partner in 1938. The Cates bought Mr. McLaurin out in 1971, but decided to retain his name in the business.
Charles Cate Jr. died in 1990 at age 89, and his sons took over operation of the dealership.
Cate-McLaurin expanded into retreading during World War II, and during the 1950s, the company began selling appliances and televisions. However, "it got to be `dog-eat-dog' in some of those lines," said Charlie, so the company got out of the appliance and TV business.
About 12 years ago, Cate-McLaurin decided to concentrate on the commercial tire market.
Charlie Cate was asked if it was difficult to sell the family business.
"That was a little hard to begin with," he said. "Thinking back, I realized that my father never hesitated to change. He always thought about the present and the future and never worried about the past.
"I feel like he would have been ahead of us on this deal, too."
Last year, Cate-McLaurin purchased a three-acre site across the street, occupied by a fork-lift sales company, to convert into a sales and service facility with 10 drive-through truck service bays.
Mr. Cate said he and his brother also were planning to expand the retread plant to a daily capacity of about 350 tires. But that plan has been put on hold until the sale of the dealership is finalized.
"We could use some additional (retread) capacity, and we're kind of exploring what options we might have," Mr. Snider said. "But at this point, we haven't firmed up any plans."
Snider Tire has opened three commercial locations from scratch in the last 18 months, Mr. Snider said, and any future expansion will be "realistic."
The acquisition of Cate-McLaurin "doesn't tax our organization," he said.
Mr. Cate said his son, Perry, and Billy Cate's son, Walker, also will remain with the business as will three employees who have owned shares of Cate-McLaurin.
"We're pleased to make a deal like this that we feel is going to be advantageous to our families and to our employees and to our customers," Mr. Cate said.