Raben Tire Co. Inc. is acquiring the assets of Disney Tire & Rubber Co. Inc. of Louisville, Ky., for an undisclosed amount, in large part to strengthen its wholesale business.
The deal, subject to final approvals and agreements, is scheduled to close Dec. 31. Disney Tire is a distributor of Summit, Remington, Hercules and other private brand tires with distribution centers in Louisville, Indianapolis, Nashville and Knoxville, Tenn.
``Both businesses have a long history of serving the needs of independent tire dealers in the Midwest and Midsouth regions, and I believe Raben Tire will be able to build on that tradition with great brands, robust dealer programs and strong growth,'' said Raben Tire President Tom Raben.
Raben Tire operates 31 locations throughout the Midwest including seven commercial centers, 14 commercial/retail stores, five retail stores, three retread plants and two warehouses. The dealership, which posts $117 million in annual sales, offers BFGoodrich, Continental, Cooper, Dunlop, General, Goodyear, Kelly and Michelin brands.
The Disney and Raben product lines will be combined under the Raben Tire banner, and Disney Tire President Steve Disney will be responsible for the combined wholesale unit. The companies said they will see immediate benefits from the unification including access to complete lines of consumer, commercial, agricultural and specialty tires and retreads.
``It's a very good strategic fit in that their strengths are something that our dealers will benefit from and vice versa,'' Mr. Disney said. ``They're very strong in the major brand programs and they're very strong in being represented in all types of product segments, whereas we have been primarily private brand and consumer products.''
Mr. Disney declined to discuss annual sales or if he will retain a minority share in the business but said ``the time was right and the opportunity was excellent'' for the deal, especially when other industry wholesalers have consolidated and become larger and more competitive.
``The combined entity will be stronger and more effective and efficient than either of us could have been as separate parties,'' he said. ``Ultimately, that's why a deal like this makes sense.''
The two companies have overlapping distribution areas but haven't worked out logistics yet, Mr. Disney said. Hence, he said he isn't sure if he will continue to be based out of Louisville. However, he acknowledged that not all 45 Disney Tire employees will stay with the combined organization.
The merger brings together businesses run by two men who helped engineer another merger: the Tire Association of North America (TANA) and the International Tire & Rubber Association (ITRA) into the present Tire Industry Association. Mr. Disney was president of TANA during that merger in 2002 and became TIA's first president while Mr. Raben was ITRA president and succeeded Mr. Disney as TIA's second president.
Mr. Disney acknowledged that the association work influenced his decision to sell to Mr. Raben. He said there was casual conversation between the two in the past on a couple of occasions, but the discussions became more serious this year.
``When you work together side by side as peers on a trade association, you get to know each other in a way that you might not as competitors,'' he told Tire Business.
Mr. Disney also noted that the decision to sell to Raben Tire was a family decision. His father, Paul Disney Jr., co-founded the business with his grandfather, Paul Sr., 55 years ago and plans to retire after the deal closes. Mr. Disney's brother, Paul Disney III, will leave the tire business to pursue other interests.
``As a family, we're enthused at this opportunity, and personally I'm excited about the challenge and the opportunity ahead,'' Mr. Disney said. ``Once again, without any question, we feel this is in the best interest of our dealers and our brands moving forward.''