MUSCATINE, Iowa (April 12, 2004) — Bandag Inc. has bought an 87.5-percent interest in Speedco Inc., a quick-service truck lubrication business with 26 company-owned outlets and six licensed locations, for $56 million.
The move is Bandag's first pure acquisition under its plans to expand beyond tire products, said Jeff Pattison, Bandag's vice president of people services. This acquisition was in the works for more than a year, with Speedco's geographic and on-highway presence among the most attractive features.
“This fits very nicely within this strategy,” he said, though he added many future plans remain to be worked out.
Muscatine-based Bandag acquired the majority stake from the company's founders, who retain a 12.5-percent interest, and Shell Oil Products U.S.
Cayuga, Ind.-based Speedco generated unaudited revenues of about $46 million and pretax income of about $4.8 million in 2003, Bandag said. Bandag expects its earnings per share to improve by 10 to 15 cents in 2004 due to the acquisition. The $56 million acquisition price Bandag paid for its stake in Speedco included $20.1 million for the retirement of debt.
Bandag said it will operate Speedco as an independent business unit, with the company's founders continuing in their current roles. They include Mark Clark, president and CEO; Jeff Clark, vice president, finance and administration; and Jim Dudley, vice president, planning and development.
“Speedco's proven track record and strong management team move Bandag measurably closer to becoming a leading provider of vehicle services that make North America's fleets more efficient,” said Martin Carver, Bandag chairman and CEO.
Speedco's facilities are stand-alone, Interstate highway locations with typically two to three bays that offer preventive maintenance. Mr. Pattison said the locations fit in strategically with Bandag's plans. The locations are mostly concentrated in the East and Midwest, with some in the Southwest but none in the Upper Midwest or Northwest.
Services include oil and filter changes, refrigeration unit service, tractor and trailer chassis lubes, fifth wheel and wheel hub service, transmission fluid change, differential fluid change, anti-freeze/coolant top-off and testing, oil analysis and tire pressure services. Prices for the services range from $7.99 for a trailer lubrication to $139.95 for a bundle of services, according to Speedco's Web site. Tire pressure services range from $8.99 to $29.99.
Mr. Pattison said any plans to expand Speedco's offerings have not yet been determined. Also on the table is whether the business would be mostly trucker walk-ins or on national accounts.
Speedco, founded 11 years ago, will continue to feature Shell lubricants and oil in its services. The company, which serviced its 2 millionth truck in September 2003, opened its 32nd location in mid-2002, according to Bandag.