Service Tire Truck Centers Inc. (STTC) has taken over over 16 Tire Centers L.L.C. (TCI) commercial outlets and one retread plant along the Eastern Seaboard, expanding the dealership's network to 42 locations in eight states.
The deal extends STTC's reach into New England for the first time, will boost the dealership's annual sales by about 50 percent initially and lays the foundation for even more growth longer term, according to STTC President Ron Bennett.
The buyout, which closed Jan. 29, includes six outlets in Massachusetts and one in New Hampshire, plus locations in Maryland, Virginia, New York and New Jersey. The retread plant, in Millbury, Mass., is a Michelin Retread Technologies (MRT) hybrid precure/mold-cure retread plant.
Financial terms were not disclosed. TCI is a subsidiary of Michelin North America Inc., operating both in the commercial/retreading business and consumer tire distribution.
The acquisition, under discussion for nearly a year, solidifies STTC's service coverage up and down the Eastern Seaboard, Mr. Bennett said.
Road service is our (STTC's) strength, he said, and this allows us to service truckers in the Eastern Corridor from New England to Virginia.
The locations now under STTC's control are: West Springfield, Peabody, Bridgewater, Lawrence, Auburn and Millbury (retread shop), Mass.; North Hampton, N.H.; Marlboro and Albany, N.Y.; South Plainfield, N.J.; Baltimore (two locations), Laurel and Waldorf, Md.; and Ashland, Richmond, and Fredricksburg, Va.
STTC's existing locations are in Pennsylvania, Delaware, New Jersey, Maryland, Virginia and New York.
The company converted its retread business in 2006 to MRT after 39 years as a Bandag Inc. franchisee.
The acquisition increases STTC's employee base by about 150, but Mr. Bennett said his company already is looking to hire additional service personnel and enhance training for all personnel. The deal increased the dealership's service truck count by about 90.
The deal also adds mold-cure retreading capacity to STTC's retread business, Mr. Bennett said, opening up a new revenue stream for the Bethlehem-based commercial dealership.
The Millbury retread plant has both MRT Custom Mold and Pre-Mold capacities, Mr. Bennett said. STTC plans to operate the unit at about 400 to 500 units a day, he said, but that can be ramped up fairly easily, depending on demand.
Having mold-cure capabilities will allow STTC to call on fleets it couldn't before, because some fleets spec mold-cure retreading.
Mr. Bennett said it's possible STTC eventually could consolidate a couple of locations where the TCI outlet is too close to an existing STTC location, but he declined to say where or when that may happen.
STTC is financing the deal through its own reserves and existing lines of credit, Mr. Bennett said.
The dealership expects the stores to be converted to STTC signage by late February/early March.
Michelin Americas Truck Tires (MATT) COO Francois Corbin said the TCI deal is in line with MATT's overall strategy to provide the highest quality products and best service to the firm's fleet customers, regardless whether it's from TCI or from an independent tire dealer.
We are looking at our long-term strategy, Mr. Corbin said, and we are highly committed to dealers who support Michelin's strategy.
Mr. Corbin declined to comment on the profitability of the units sold. The outlets' 155 employees are now part of STTC, according to TCI President Joe Finney.
This is the the third major divestiture by TCI in the past year.
In May the company sold an MRT plant and a commercial tire center in Norfolk, Va., and a commercial center in Newport News, Va., to Edenton, N.C.-based Colony Tire Corp.
In April TCI sold 10 commercial service locations in Georgia and North and South Carolinaincluding retread plants in Ellenwood, Ga., and Statesville, N.C.to Snider Tire Inc. of Greensboro, N.C.
Both deals coincided with the dealerships' decision to convert their retreading businesses to the MRT system.
The latest deal shrinks TCI's commercial tire business to 60 outlets and 10 retread plants in 15 states, mostly throughout the Sun Belt from Florida to California.
Messrs. Corbin and Finney said each of the divestitures made in the past year was an individual decision and not part of a larger plan to divest TCI on a larger scale. Instead, they said Michelin will continue to invest in TCI and expand its distribution in areas where this offers customers the best value.
MATT views TCI as a customer like any other, Mr. Corbin said.
To reach Bruce Davis: [email protected]; 330-865-6145.
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