NEW YORK (May 2, 2005) — A New York City-based private equity firm has agreed to acquire shareholder-owned Hercules Tire & Rubber Co. for an undisclosed sum.
FdG Associates has entered into an agreement with Findlay, Ohio-based Hercules “to recapitalize its business in partnership with management.” A statement provided to Tire Business by a spokeswoman for the equity firm said the transaction “will allow Hercules to strengthen its financial base, further develop its private label program, solidify its position in the distribution of private label and branded tires and capitalize on growth opportunities.
“Hercules' relationships with its customers and suppliers will remain unchanged,” FdG said. The statement said further details of the Hercules deal “will be made available shortly when the transaction closes.” That is expected to happen within the next several weeks.
Hercules—with its main office in Findlay—was started in 1952 by a group of independent tire dealers “to provide consistent high quality products to independent dealers and retreaders,” according to the company's Web site. Among its holdings are an export division, called Treadway Exports, and Tire Dealer's Warehouse and Tire Specialists, which are wholesale distribution centers providing dealers with the company's Hercules, Merit and Signet private brands and the Kumho Tire Co. Ltd. associate Marshal brand as well as nearly 20 major and associate brand tires and tire-related products.
Hercules also has an Asia Pacific unit that is, according to the company, “committed to providing competitive high tech manufacturing sources for our world products and establishing our Hercules name in the Australian market.”
Hercules only recently sold its custom rubber compounding business to Toronto-based Biltrite Industries and said it would reinvest the undisclosed sales proceeds into its tire operations and keep its corporate offices at its present site under lease from Biltrite for up to three years.
FdG specializes in recapitalizations, management buyouts, industry consolidations and growth investments. The firm generally focuses on business and financial services, consumer products and services, value-added distribution, light manufacturing and retail.
The company's Web site pegs transaction investment sizes as ranging from $40 million to $150 million, with an equity investment of $15 million to $50 million. It said minimum EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) is $8 million.