NEW YORK (Feb. 8, 2005) — Global investment group Investcorp has reached a definitive agreement to purchase American Tire Distributors (ATD) Inc. from its Boston-based majority shareholder, Charlesbank Capital Partners L.L.C ., a private equity firm.
The deal is expected to close in late March. Investcorp will pay $710 million minus the amount of ATD´s outstanding debt on Jan. 1, 2005, according to an ATD 8K filing with the Securities and Exchange Commission. ATD´s net indebtedness as of Oct. 2, 2004, was $240.2 million.
ATD, based in Charlotte, N.C., is the nation's largest independent distributor of tires and tire-related products, operating more than 70 distribution centers servicing all or parts of 35 states. In 1999 the company sold the majority of its equity interests to Charlesbank, which has more than $1 billion of capital under management.
Steven Puccinelli, an Investcorp managing director, said in a prepared statement that ATD “holds a strong position in a fragmented but growing replacement tire distribution market. We look forward to partnering with Dick Johnson (ATD's chairman and CEO) and his team to capture the growth opportunities that are available to the company and, just as importantly, to help its independent tire dealer customers grow their businesses.”
Investcorp, with offices in New York, London and Bahrain, has four lines of business: corporate investment, real estate investment, asset management and technology investment. Since its establishment in 1982, the firm has completed transactions with a total acquisition value of more than $25 billion. It now manages total investments in alternative assets of about $8.6 billion.
In thanking Charlesbank for its support of ATD, Mr. Johnson said Investcorp's acquisition “changes nothing in ATD's strategic direction—the growth of our dealers' businesses remains central to our success and growth. We aim to continue to improve our capabilities in distribution and customer service to achieve this basic strategic goal, and look forward to benefiting from Investcorp's deep experience along the way.”
In addition to handling Michelin, Goodyear, Bridgestone, Firestone, Uniroyal, BFGoodrich, Dunlop, Continental and several private and associate brands, ATD also distributes aftermarket wheels, accessories and automotive service equipment. In the past dozen or so years the company has transformed itself from when it was originally known as J.H. Heafner Co. Inc. to Heafner Tire Group, better reflecting its status as a national distributor and—after a series of major acquisitions—eventually ATD.
Most recently ATD acquired the inventory of Dallas Wheels and Accessories Inc. in Arlington, Texas. Prior to that the distributor bought Big State Tire Supply last April and Target Tire Corp. in September, adding more than $100 million in annual sales to its bottom line. That pushed its 2004 sales to beyond $1.2 billion—about twice the sales volume projected by its largest independent wholesale rival, TBC Corp.