Bandag Inc. plans to sell 15 Tire Distribution Systems Inc. locations in Texas during the fourth quarter to Southern Tire Mart L.L.C. of Columbia, Miss., completing a deal the two companies entered into 18 months ago.
Terms of the transaction are not being disclosed. Bandag did not say whether it would report a gain or loss on the sale, but did say it did ``not not necessarily expect the profitability of TDS to remain at curent levels'' after the change.
The Texas locations-10 commercial tire outlets and five retread plants-generated $31.1 million in sales and $135,000 in earnings for the six months ended June 30, according to Bandag's 10-Q filing with the Securities and Exchange Commission.
Bandag sold Southern Tire Mart 14 commercial tire stores and six retread plants-seven stores and three retread plants each in Louisiana and Mississippi-in March 2003 as part of a larger divestiture of 25 outlets and 12 retread plants.
Southern Tire Mart is led by Thomas and James Duff of Columbia, who had owned and operated the business before selling it to Bandag in 1997.
The company also bought TDS locations in Memphis, Tenn., and West Memphis, Ark., earlier this year, expanding its reach into that market.
Bandag also sold a location in Amarillo, Texas, to Bill Williams Tire Centers of Midland, Texas, allowing Williams Tire to expand its distribution reach northward, according to Bill Williams, president.
Williams Tire now has five commercial outlets-Abilene, Amarillo, Lubbock, Midland and San Angelo-of which two, Abilene and Midland, are mated with Bandag retread shops. The dealership is primarily a Bridgestone and Cooper dealer, Mr. Williams said, but also sells Goodyear and Michelin.
Mr. Williams said the TDS outlet became available after Bandag disposed of its TDS holdings in Oklahoma, to which the Amarillo location reported.
Bandag disclosed the pending sale in its third quarter financial report, in which it said TDS had nearly doubled its operating income for the quarter, to $3.6 million, which pulled the unit $700,000 into the black for the nine months ended Sept. 30. It also booked a loss of $552,000 on the sale of the Texas, Tennessee and Arkansas centers.