Monro Muffler Brake Inc. is acquiring 10 more Mr. Tire retail tire stores in Maryland to go with 26 Mr. Tire stores the automotive service chain acquired in March 2004.
Monro, which has bought more than 70 retail tire stores in the past two years, agreed to buy the 10 stores from Henderson Holdings Inc. The stores, located in southern Maryland, were part of the original Mr. Tire chain Monro bought last year from Atlantic Automotive Corp. Henderson has operated the stores separately for the past six years.
The 10 stores have combined annual sales of about $12.5 million, Monro said. They should contribute to Monro's earnings during the first year, though ``we would hope to improve upon that,'' said Monro President and CEO Robert Gross.
The parties did not disclose the value of the transaction, which will be partly cash and partly Monro common stock, according to Monro. The deal should close by March, subject to customary terms and conditions. Monro approached Henderson after last year's Mr. Tire acquisition to bring all the Mr. Tire outlets back together under common ownership, Mr. Gross said.
``We expect the new stores not only to strengthen our geographic footprint but also to complement our existing tire stores,'' Mr. Gross said. ``Monro's market position, purchasing power and marketing expertise can complement the stores' existing operating strengths and help to drive sales growth and expand margins at these new locations.''
Monro operates 612 automotive undercar repair and tire stores in 16 states stretching from Indiana to New Hampshire and as far south as South Carolina. The company's goal is to grow within those or in contiguous states, according to Mr. Gross.
``Would we love to be in Georgia? Sure, or Kentucky,'' Mr. Gross said, adding that the greatest economies of scale come from an acquisition in an existing market where Monro can combine logistics, inventories and advertising.
With tire sales now comprising $100 million of its $350 million in sales, Monro definitely is interested in acquiring more tire stores in 2005.
``I'd be very disappointed if we didn't,'' Mr. Gross said. ``We bring a lot to the table as well as I think that there are a number of opportunities out there....We certainly have the resources to continue along this path and are very encouraged with now our 80 tire stores.''
Additionally, Monro's debt to capital ratio is only 25 percent, with $60 million available from its $110 million credit line, he noted. He said those figures don't even account for stock.
In fiscal 2005, Monro's tire-related sales should eclipse $70 million, based on the company's half-year results and the latest acquisition.
Acquisitions since March are: Kimmel Automotive (34 stores in Virginia and Maryland), Frasier Tire Co.'s 10 retail outlets in South Carolina, Mr. Tire Inc. (26 stores and 10 tire kiosks in car dealerships in Maryland) and Donald B. Rice Tire Co.'s five retail stores in Maryland.
Tire Business Special Projects Reporter Bruce Davis and Senior Reporter Vera Fedchenko contributed to this report.