Coast Tire & Auto Service Ltd. is acquiring a retread plant and two commercial outlets in the Maritime Provinces from Goodyear Canada Inc. for an undisclosed sum, while at the same time changing ownership hands.
Coast Tire, predominantly a Goodyear dealership with 17 stores, is buying Goodyear Canada company-owned stores in Bathurst, New Brunswick, and Dartmouth, Nova Scotia, and a Next-Tred plant in Moncton, New Brunswick. All locations will fly the Coast Tire/Goodyear banner. The deal was scheduled to close April 1.
Goodyear Canada, meanwhile, will become a minority shareholder in Coast Tire by acquiring a 49-percent stake in the company.
The tire maker already owns 49 percent of the shares in Edmonton, Alberta-based Fountain Tire Corp. and in Flamborough, Ontario-based Beverly Group Inc.
``Goodyear Canada is very pleased to further strengthen its existing relationship with Coast Tire,'' said Richard Houle, vice president of consumer tires for Goodyear Canada. ``Our investment in Coast Tire will further enhance our market coverage for current and future Goodyear customers in the Maritime Provinces.''
The commercial outlets are combination commercial/retail stores. The Moncton Next-Tred facility retreads 30,000 units per year, according to Ronald Outerbridge, vice president of Coast Tire.
Along with the acquisition of the Goodyear locations, Mr. Outerbridge is buying majority ownership in the dealership from owner Malcolm Baxter and family in a parallel deal that also was to close April 1. Terms of this deal also were not disclosed.
Mr. Outerbridge joined Coast Tire six years ago with no prior experience in the tire industry. He is an accountant by training and was involved in Coast Tire's purchase of 10 Maritime Tire Ltd. outlets in 1998.
Mr. Baxter, 67, founded Coast Tire in 1984 and is now retiring, according to Mr. Outerbridge, who at 37 is venturing into owning his first business.
``I've been running the business for the last couple years and sort of helped in the growth of the business as well,'' Mr. Outerbridge told Tire Business.
Mr. Outerbridge has been negotiating both deals simultaneously for the past three months, though the opportunity to take over Coast Tire from Mr. Baxter came first, he said. He noted that Coast Tire traditionally has expanded by acquiring former Goodyear outlets and partnering with the tire maker.
``A lot of our growth in the past was taking over Goodyear corporate stores. So it was a natural progression,'' Mr. Outerbridge said.
Coast Tire posts annual sales of $34 million (Can.), and Mr. Outerbridge said that after the Goodyear deal closes, Coast Tire's sales will total more than $40 million (Can.). He emphasized that, though Goodyear Canada will be a shareholder in the dealership, the tire maker will not be operating the dealership.
``They've done this before,'' Mr. Outerbridge said. ``They have an arrangement out in western Canada with Fountain Tire and an arrangement in Ontario with Beverly Tire and run those just as investments. They'll have some representation on the (Coast) board, but other than that, nothing else.''
Goodyear Canada in recent years has been divesting its company-owned stores because of the economies of scale in the country, as well as the fact that company stores compete with franchises and other dealers for advertising dollars. The firm instead has favored acquiring minority ownership of select independent retailers.
Mr. Outerbridge noted that Coast Tire will continue to grow possibly beyond the Maritime provinces to Quebec and perhaps even Maine, though there are no set plans now.
He also said that within the Maritimes, there are ``definitely some void markets that we could expand into'' through new stores and acquisitions in the future.