ROCHESTER, N.Y. (Feb. 10, 2004) — Monro Muffler Brake Inc. is buying 36 Mr. Tire outlets in Maryland and Virginia in an asset purchase transaction valued at about $29 million.
The acquisition, due to close in March, “represents an exciting opportunity to increase our market share in the mid-Atlantic region, particularly in the important Baltimore market,” said Monro President and CEO Robert G. Gross. “Mr. Tire has a dominant presence, strong brand recognition and I believe the best performance in that market."
Monro is acquiring the Mr. Tire chain from privately held Mile One Automotive, a new car dealership group that bought Mr. Tire five ears ago.
The Mr. Tire chain, comprising 26 tire and automotive repair stores and 10 kiosks located in Mile One car dealerships, reported $50 million in sales last year. Monro anticipates booking pre-tax earnings of between $5 million and $6 million in the first full year of ownership, Mr. Gross said, with a contribution of 6 to 10 cents a share in fiscal 2005, which begins March 28.
Mr. Gross complimented the Mr. Tire organization, calling it a “profitable, well-run operation with talented management and employees. We look forward to this acquisition further strengthening our business and solidifying our platform for continued growth."
Monro expects the addition of the Mr. Tire stores, which have posted comparable store sales increases of more than 12 percent each of the past two years, to improve its tire margins companywide.
“Combined with our 24 Kimmel and Speedy stores in the area and contiguous Tread Quarters tire stores in Virginia,” Mr. Gross said, “we anticipate near-term synergies in operations, purchasing, logistics and advertising, leading to increasing profitability beyond fiscal 2005."
Monro said it has no plans to close any of the Mr. Tire locations, and the stores will continue to operate under the current brand name. Monro intends to retain substantially all Mr. Tire store employees.
Mile One Automotive CEO Steven Fader said, "We considered Monro to be the best fit in the long-range plans for Mile One. Our complementary products and services, parallel commitment to our customers, and similarly dedicated employees will ensure a smooth integration. Our agreement provides for a long-term, ongoing, strategic relationship that should only reinforce our continued support for all of our customers."
The acquisition will expand Monro's presence to more than 600 company-owned locations in 18 states, operating under the Monro Muffler Brake and Service, Speedy Auto Service by Monro, Kimmel Tires-Auto Service, Tread Quarters Discount Tires and Mr. Tire brands.
Monro´s stores provide a full range of services for exhaust systems, brake systems, tires, steering and suspension systems and many vehicle maintenance services.
Monro's sales for the first nine months of fiscal 2004 were $212.3 million, up 8 percent from $196.6 million the previous year. Net income jumped 31.7 percent to $14.8 million from $11.3 million.