NASHVILLE, Tenn.-In one of the biggest strategic alliances ever between a tire manufacturer and a dealership chain, Bridgestone/Firestone Inc. has purchased a majority share of Morgan Tire & Auto Inc. for an undisclosed amount.
BFS will eventually acquire full ownership of Morgan Tire under the purchase agreement, and run it as a subsidiary. Larry Morgan, chairman, president and CEO of Morgan Tire, will remain in those positions under the new ownership.
Morgan Tire ``will remain an integral part of the Bridgestone/Firestone Family Channel, which includes independent dealers, retailers and company-owned stores,'' according to the BFS press release issued Aug. 9. It will continue to sell not only Bridgestone and Firestone tires, but competitors' products as well.
``This strategic alliance will enable us to solidify our Family Channel and further grow our position in the marketplace,'' said Shu Ishibashi, executive vice president of Bridgestone/Firestone and president of its U.S. Consumer Tire operations, in the release.
Mr. Morgan called BFS, his major supplier, ``an ideal strategic partner because we share similar corporate cultures and we are working toward the same goals and objectives.''
Mentioning his 36-year relationship with Bridgestone/Firestone-``first as an employee and then as a customer''-Mr. Morgan assured his customers that the quality of service at Morgan Tire would remain high.
``The overall objective is to continue to improve our service levels for customers,'' he said. ``This relationship provides us with access to opportunities and resources of a larger company, yet we will remain separate and enterpreneurial.''
Mr. Morgan and Mr. Ishibashi answered questions about the deal in an Aug. 9 conference call, with the latter noting that BFS began its alliance with Morgan Tire in 1998, buying shares incrementally in the chain.
Mr. Morgan said he began to assess alternatives on how to continue his business after learning that his children did not want to enter it.
The decision to acquire the dealership long predated the current drop in Firestone-brand replacement tire sales, Mr. Ishibashi said. ``This is a unique opportunity for us.''
Mr. Morgan added that although his company has experienced some softness in Firestone-brand sales, it has made up for that with sales of Bridgestone and Dayton tires. His goal, he said, is to have BFS products comprise 75 percent of Morgan Tire's sales, noting that while it wasn't there yet, that percentage would be ``easily achievable.''
Morgan Tire will continue to maintain its own banking relationships, manage its own debt and plot its own growth plans, Mr. Morgan said. But he suggested that the company's growth pattern-40 to 50 new stores annually-might not be so aggressive from now on.
While Tires Plus stores have tended to be more tire-oriented, Firestone company stores have been more auto service-oriented. ``Both can continue to grow through separate formats in the same marketplace,'' he added.
Based in Clearwater, Fla., Morgan Tire ranks as the nation's second-largest independent retailer of tires, with 558 stores in 25 states. It owns and operates several major chains, including Olson Tire & Auto, Hibdon Tire and Wheel Works, Avellino's and Michel Tire.
In July 2000, Morgan Tire announced its purchase of Burnsville, Minn.-based Team Tires Plus Ltd., and later announced its plan to rename all the stores under its ownership as Tires Plus.