Auto parts and tire wholesaler U.S. AutoForce has purchased the tire wholesale business of St. Cloud-based Royal Tire Inc. along with Royal's Tire One affiliated dealer program.
Combined Locks, Wis.-based U.S. AutoForce, a division of U.S. Venture Inc., did not disclose terms of the deal, which closed April 15 following six months of negotiations. In addition to Royal Tire's wholesale business, which U.S. AutoForce is consolidating into its existing warehouses, the Tire One program gives the company access to more than 300 dealer members throughout Iowa, Minnesota, Wisconsin and North and South Dakota.
Pat Hietpas, vice president of distribution for U.S. AutoForce, said one of the primary advantages of the deal was that it “strategically fit in the markets we serve.”
As for the Tire One program, Mr. Hietpas did not go into specifics but said, “We'll continue to expand it across the Midwest without infringing on any of the existing customers.” He added that some Royal Tire employees from its wholesale business have been retained in the deal.
Royal Tire will continue to operate its 20 tire and service shops, which comprise several commercial only, retail only and combined retail and commercial locations. Two of Royal Tire's commercial centers in St. Cloud and Monticello, Minn., are also retread plants.
The sale, according to Pat Duininck, owner and CEO of Royal Tire, will allow the company to better focus its efforts on the commercial and retail side.
“We had to make some decisions on where we wanted to put our efforts, and our commercial business is a stronger, faster-growing business for us,” he said. “We felt this was an opportunity to get some resources and boost that.”
With commercial and retail now its primary focus, the company is looking at more opportunities for expansion, Mr. Duininck said.
“Our guys are looking at new geography,” he said. “We always do that, but they're looking a little harder for areas we're not servicing real well that we can get into. We have great programs for retail and commercial already, it's just a matter of duplicating it somewhere else.”
Mr. Duininck added that the company has not decided whether it will let the leases expire on its four wholesale distribution centers—in St. Cloud, Grand Forks and New Ulm, Minn., and Tomah, Wis.—or continue using them for its commercial business.
Royal Tire derived about $14 million in sales annually from its wholesale business, the dealership said last fall.