ROCHESTER, N.Y. (July 26, 2013) — Monro Muffler Brake Inc.'s pending acquisition of Curry's Auto Service Inc. in Virginia is likely just the first of several acquisitions the Rochester-based auto service provider is negotiating this year.
Monro CEO John Van Heel, speaking to financial analysts in a conference call July 25, said Monro is in takeover talks with seven more retail tire and auto service retailers ranging in size from five to 40 stores.
Five of these possible acquisitions are within Monro's existing market footprint, he said, with the others in adjacent markets.
Monro expects to close the deal for the 10 Curry's Auto stores by mid-August. Monro said the Curry's stores in northern Virgina and Maryland generate about $18 million in sales annually, with approximately 80 percent coming from auto service and 20 percent tires. The deal will boost Monro's presence in the Washington, D.C., area to roughly 50 stores, including 35 Mr. Tire locations.
Mr. Van Heel said Monro is back in the acquisition market after taking a six-month break to integrate its fiscal 2013 acquisitions—principally Ken Towery's Tire & Auto Service of Louisville, Ky. (27 stores); Enger Auto Service & Tires of Mentor, Ohio (11 stores); Tire King Complete Car Care of Durham, N.C. (nine stores); and Tire Barn Warehouse of Anderson, Ind. (31 stores)
"Based on the current transaction, the current macro environment and our existing (non-disclosure agreements), we think the acquisition environment can heat up further in the second half of the year," Mr. Van Heel said.
"We have plenty of liquidity combined with strong cash flow to complete these deals and remain very disciplined on the prices we pay with 7 to 7.5 times EBITDA, or about 80 percent of sales being our key metric," he said. "Importantly, we continue to compete only with the sellers' expectations in these deals."
Commenting on the Curry's deal, Mr. Van Heel said the business' sales mix heavily skewed to the auto service side does not signal a shift away from the company's acquisition strategy.
"Our multi-branding strategy allows us to have that kind of flexibility as we approach acquisition candidates,…" he said, adding that, in general, four out of five businesses Monro considers for acquisition are predominantly tire retailers.
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