Groupe Touchette to acquire Atlas Wholesale

MONTREAL — The landscape of the North American wholesale tire business has changed once again, as Montreal-based Groupe Touchette Inc. announced it is acquiring Atlas Tire Wholesale Inc.

The move provides Groupe Touchette, Canada's largest tire distributor, with extended reach, particularly in Ontario, where Atlas operates three distribution centers and has a fourth under construction.

With both companies privately owned, financial details were not released. Groupe Touchette only said it acquired "the totality" of Atlas shares.

Groupe Touchette said that once the acquisition is final, sales revenue should be in the range of $420 million to $500 million annually.

Groupe Touchette will have a workforce of nearly 750 spread among 35 distribution centers in Canada, with a combined storage capacity of 1.7 million square feet. That's a 25-percent increase over what it currently has.

The move coincides with Groupe Touchette's business plan, aimed at accelerating growth in the Canadian distribution market.

Groupe Touchette Co-Owner and CEO Nicolas Touchette called Atlas "a respected major player in Ontario," making it the ideal partner for Groupe Touchette to strengthen its position as a key player in Canada and, more specifically, in Ontario.

Prior to the sale, Groupe Touchette was distributing tires in Ontario under DT Tire and TireLink from five distribution locations, including one in Brampton to serve Greater Toronto.

"In addition to providing an opportunity for increased market coverage, we realized that there was a natural fit and no significant overlap between both companies. With the acquisition of Atlas Tire Wholesale Inc., we are taking an important step in our expansion plan by ensuring a strong presence in Canada's largest market," Mr. Touchette said.

Mississauga, Ontario-based Atlas, a leading Canadian tire distributor that services car dealerships and independent tire retailers, operates six distribution centers, including three in the Greater Toronto area — in Mississauga, Scarborough and Vaughan. Atlas also has two facilities in Alberta (Edmonton and Calgary) and another in Delta, British Columbia.

A fifth Ontario location, an "inventory support center" also located in Vaughan, is expected to be in operation in the spring of 2019. Once opened, the 182,000 sq.-ft. leased facility, which has 24 loading docks and 30-foot high ceilings, will become Groupe Touchette's largest and will give the company 550,000 sq.-ft. of storage capcity in Ontario alone.

Group Touchette said it had no plans to reorganize other than to make a few adjustments over the short or medium term, "especially seeing there is no significant overlap because both companies fit together perfectly," according to a company spokesperson. Things remain status quo for employees, clients and suppliers.

"As for the employees, we will always need good talent to carry out and complete a variety of projects," the spokesperson said. " Being part of a larger group will bring many opportunities for them. Our main focus is the future growth of the combined entity. Consequently, in a context where we are facing a shortage of manpower, this transaction should be seen as positive news for employees."

The companies gradually will integrate the Ontario market over the next year.

Frédéric Bouthillier, co-owner and chief operating officer of Groupe Touchette, said his company will "learn, study, listen and get to know Atlas' employees and client" over the next few months.

"Atlas Tire benefits from well-established and respected brand equity as well as solid market expertise," Mr. Bouthillier said. "Through this transaction, thanks to the addition of dedicated and qualified employees and through a strong clients network, Groupe Touchette just got better by significantly improving its coverage of the Ontario and Canadian markets.

"This will be an exciting new adventure that will lead us to unprecedented highs and unparalleled achievements," he said.

Atlas President Peter-James Gregory said the firm wasn't for sale but that hadn't prevented other firms from inquiring about its availability. Atlas, founded in 1990, employs 190 with a fleet of 60-plus delivery vans and trucks.

"The approach from Groupe Touchette was interesting and, as we listened, we felt that they would be the right partner to ensure the continuity and development of what we have built over the past 28 years," Mr. Gregory said.

"Throughout our discussions, I was impressed by their commitment toward our employees, clients and partners. I am convinced that Groupe Touchette has what it takes to win in the Ontario market and become the leader in Canada."

Groupe Touchette, which employs around 550, recently announced it had relocated its distribution center in Regina, Saskatchewan, to a facility less than two miles away that offers twice the capacity as the former warehouse.The new facility is capable of storing 24,000 tires.

It also opened new tire distribution facilities in Halifax, Nova Scotia, and Quebec City and expanded another facility in Vancouver.