PHOENIX—In what is being termed a "unique" pairing, Morgan Tire & Auto Inc. and CSK Auto Inc., a West Coast specialty retailer of aftermarket automotive parts and accessories, will be doing business together. The two firms reached a lease agreement linking Morgan's Wheel Works tire outlets with CSK's stores at 28 locations in the Greater San Francisco Bay area.
CSK Auto Inc., a wholly owned subsidiary of CSK Auto Corp., acquired these locations in October as part of its purchase of 194 Grand Auto Supply and Al's Auto Supply locations in six states from Paccar Inc.
Each of the 28 locations has a retail sales area for parts and accessories and a service facility, said Larry Morgan, CEO of Clearwater, Fla.-based Morgan Tire.
CSK will continue to operate the retail section, while Morgan Tire will convert the service areas to Wheel Works stores with separate entrances and signage.
Adding the 28 locations increases the number of Wheel Works stores in the San Francisco area to 53.
Financial terms of the agreement were not disclosed.
CSK has more than 1,100 retail auto parts stores in 19 western states doing business as Checker Auto Parts, Schuck's Auto Supply and Kragen Auto Parts.
CSK Auto Corp., based in Phoenix, is a publicly traded company with about 10,000 employees. It reported sales of more than $1.3 billion in the last 12 months.
"This transaction is consistent with our strategic focus on auto parts retailing," said Maynard Jenkins, chairman and CEO of CSK Auto Corp., in a press release. The company will reduce its involvement in servicing customers' vehicles, he said, and will "focus more on expanding our commercial sales in the region."
Mr. Morgan called the arrangement with CSK "unique." The Wheel Works stores will purchase parts on a commercial basis from CSK and pay rent, he said, "and we're in a lot of areas of the San Francisco Bay area that we wouldn't be able to get into for either zoning or economic reasons."
"It's perfect for us," he added. "Geographically, it hit all our open markets. Out of all the stores, we only had two overlapping markets. It's amazing.
"We were already the dominant player in the San Francisco Bay area, but this really makes us extremely strong."
As part of this transaction, Morgan Tire also took outright possession of six CSK stores in other communities in central California, including Sacramento. Mr. Morgan said his company may or may not operate them as tire stores, or may sublease them for other uses.
Morgan Tire, the nation's third-largest dealership in number of company-owned stores, now has 395 retail locations in 15 states.
Besides Wheel Works, which it acquired in early 1999, the company also does business as Olson Tire, Hibdon Tire Centers, Avellino's Tire and Michel Tire.