BOUND BROOK, N.J.-Somerset Tire Service Inc. has agreed to buy 18 Wholesale Tire Co. retail stores on Long Island and in the New York metro area, pushing STS's retail network to 101 stores in New York, New Jersey and Pennsylvania.
At the same time, American Car Care Centers Inc. has assigned most of the territory WTC covered for ACCC to Englewood Tire Distributors of Lyndhurst, N.J., which will represent ACCC in New Jersey, the greater New York metro area and Hudson Valley, Connecticut, and most of the Philadelphia metro area.
Terms of the pending STS-WTC deal were not disclosed; STS expects to close the deal in the first quarter of 2002. Bayshore, N.Y.-based Wholesale Tire Co. will retain five retail stores in upstate New York.
``This acquisition will allow STS to continue our ambitious growth strategy in the tri-state area,'' said Bill Caulin, president of STS, in a prepared statement. STS first opened a store on Long Island in 1999 and has opened four since.
WTC employees affected by the transaction will become employee-owners of STS through the latter's employee stock ownership program. WTC owner Bob Lico, in a prepared statement, called the deal a ``win-win'' situation for all involved.
The new stores will add about $24 million in annual sales to Somerset Tire's ledger, pushing STS to more than $100 million in annual retail revenue. As a result, STS will rank as the seventh- or eighth-largest independent retail dealership in North America in the coming years.
STS said it was not the only company to make a bid for the stores, but a company spokesman declined to identify any other interested party.
STS also operates seven wholesale centers, serving the tri-state area and Massachusetts and generating about $25 million in annual sales. In early November, it acquired Ramapo Discount Tire Centers of Mahwah, N.J., with six retail and one wholesale centers.
The 18 WTC stores will be renamed STS gradually, the spokesman said, and will be switched over to STS's products and services. That means they no longer will operate as American Car Care Centers-affiliated outlets, although STS will honor warranties issued by the WTC outlets for an undetermined length of time.
Englewood Tire will assume responsibility for about 50 ACCC accounts in WTC's territory, principally in New York and New Jersey, said John Boyle, Englewood Tire president, who estimated the potential for new business at $20 million.
ETD also will convert its nine retail stores in New Jersey to ACCC signage and offer the ACCC program to its 29 affiliated Discount Tire Centers, Mr. Boyle said. ETD already had planned an expansion into these areas,l with a new distribution center due to open in March in Wallingford, Conn. A third distribution point now will be opened on Long Island, he said.
Mr. Lico was unavailable for comment on the future of WTC's wholesale business-which accounted for 59 percent of the firm's $80 million in sales in 2000-or plans for the remaining retail stores.
STS said a few of the locations being acquired are near existing STS stores, and that situation will be studied once the deal closes.
STS is a member of the Tire Alliance Groupe, whose dealers offerings include Continental, General, Firestone, Michelin, Pirelli and Toyo brand tires.