And we thought 2020 was quite a year.
Not to take anything away from last year — it was a year that won't be forgotten anytime soon, both for its heartache and heartwarming stories — but this year already has proved to be quite memorable in its own right, at least in the tire and automotive service industry.
With the year barely 75 days old, there already has been enough M&A activity (mergers and acquisitions) to last a lifetime.
Prime among them, at least since the start of March, is BayPine L.P.'s bid to purchase Mavis Tire Express Service Corp., a network of more than 1,100 company-owned and franchised locations spread across 27 states. The investment firm, in partnership with TSG Consumer Partners LP (TSG) and existing equity holder West First Management (WFM), a holding company controlled by Mavis co-CEOs David and Stephen Sorbaro, hope to close the deal in the second quarter.
A few days later, Monro Inc. struck a deal to purchase Rancho Cucamonga, Calif.-based Mountain View Tire & Auto Service Inc., which operates 30 retail stores in the Los Angeles area. Once consummated, that purchase will give Monro 76 stores in California and boost its store count to nearly 1,300 in the U.S.
And don't overlook American Tire Distributor Inc.'s Tirebuyer.com purchase of competitor Tirescanner.com. The merger of the two online tire retailers — to be operated under the Tirebuyer.com name — contracts a growing online tire buying market that continues to grow organically.
We haven't even mentioned the largest M&A to hit our industry in the last decade-plus: Goodyear's pending $2.5 billion acquisition of Cooper Tire & Rubber Co. The integration process for that particular deal is well under way.
While the deal could hit a stumbling block as the weeks roll by, analysts say there's no reason to believe by this time next year, stalwart brands such as Cooper, Mastercraft and Mickey Thompson will be made and marketed by Goodyear.
It's worth noting, too, that late last year, another investment group, Meritage Group L.P., struck a deal to buy Les Schwab Tire Centers, the nation's sixth largest independent retail tire dealership with 438 stores.
Two other groups relatively new to the tire and automotive service industry but equally aggressive in their acquisition strategy — Leeds West Group (LWG) and GB Automotive Service Inc. — have been quite so far in 2021, with only one deal between them, LWG's acquisition of three Big O Tires outlets in Oklahoma from MFA Oil Co. in February.
GB, with 181 locations, and LWG, with 113, rank seventh and 11th, respectively, as the largest independent retail tire dealerships, according to Tire Business rankings.
So what does this mean for the industry?
On one hand, it seems to hasten the move to larger dealerships at the expense of smaller independent dealers. As larger players look to increase their portfolio, regional reach and efficiencies, it's almost inevitable for the big to get bigger and the small to retire to a life of less stress.
On the other hand, these moves illustrates the strength and resiliency of the industry. With so many investment firms keying on the industry — or more candidly, the profits they expect to make — the future looks bright.
The COVID-19 pandemic certainly shone a brighter light on that. The industry was deemed "essential," and record profits by many companies in this industry during an otherwise bleak economic year illustrates just how essential that is for consumers in North America.
GB Auto CEO Frank Kneller perhaps said it best:
"Now it's proven to be COVID-resistant, recession- resistant and ... Amazon-proof, too." he said.
"It doesn't require a lot of capital expense to run it right once you get your equipment and your building leased. Those are the things that attract a private equity."
