Updated: ATD to buy Monro tire-distribution unit for $105M

HUNTERSVILLE, N.C. — American Tire Distributors Inc. (ATD) is acquiring the the wholesale tire distribution arm of Monro Inc., which operates as Tires Now, boosting the portfolio and reach of ATD, North America's largest tire distributor.

ATD will pay $105 million to Monro under terms of the deal in which it will acquire Tires Now operations and "certain assets under Monro's internal distribution operations." ATD will pay $65 million at closing, while the balance ($40 million) will be paid quarterly based on Monro's tire purchases through ATD, as stipulated under the distribution agreement.

The deal is expected to close by the end of the second quarter of 2022, subject, ATD said, under the Hart-Scott-Rodino (HSR) Antitrust Improvements Acts of 1976, as well as other closing conditions.

ATD will receive control of Tire Now's seven facilities situated across four states, which services more than 3,500 wholesale customer locations, according to ATD. The distribution centers are in Kentucky (Louisville); North Carolina (Black Mountain, Charlotte, Conover); South Carolina (Greenville); and Tennessee (Johnson City, Knoxville).

ATD said the acquisition will "strengthen its strategic support of the tire business" at Monro, which operates more than 1,300 retail tire and automotive service dealership. ATD and Monro said both of the companies' partners and customers "are expected to benefit from the increased operational efficiencies" that the transaction will create.

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ATD President and CEO Stuart Schuette called the addition of Tires Now "another important step in ATD's transformation journey."

Schuette said the tire distributor is "adding volume and geographic reach that will make us an even stronger supply chain partner to our customers and the manufacturers with which we work. We also view this as a win for the tire supply chain network and a step forward for both ATD's and Monro's commitments to sustainability."

Schuette said the acquisition supports ATD's Environmental, Social and Governance (ESG) and its current emissions efficiency initiatives.

"Together with Tires Now, we will be able to better reduce overall emissions," he said. "This is a truly unique opportunity, and we look forward to working closely with Monro, as well as our other customers, to provide our full platform of ATD's logistics services."

Troutman Pepper is serving as ATD's legal counsel to ATD, while Harter Secrest & Emery L.L.P. is serving as transaction counsel to Monro, with Gibson, Dunn & Crutcher LLP serving as HSR counsel.

Monro President and CEO Mike Broderick said Monro and ATD have worked together for nearly two decades. He said the deal doubles down on the company's "focus on our retail footprint while gaining the financial and operational flexibility to continue executing our plans."

Broderick said Monro intends "to build on our relationship as we leverage their logistics network and innovation to better serve our growing group of retail customers with the highest standards of service. We also are pleased by the sustainability benefits of this transaction, including emissions reductions."

ATD recently earned a Green Supply Chain award, which recognizes companies that prioritize sustainability as core to their supply-chain strategy, from Supply & Demand Chain Executive magazine.

Broderick said the deal demonstrates Monro's"commitment to delivering best-in-class service, identifying value-enhancing opportunities and driving shareholder value."

Monro generated approximately $1.4 billion in sales in fiscal 2022. It operates more than 1,300 stores and 9,000 service bays in the U.S.

ATD currently operates more than 130 distribution centers, including 24 distribution centers in Canada, serving approximately 80,000 customers across the U.S. and Canada. It said he employees 5,000 associates across its distribution center network, including approximately 600 in Canada.

It is unclear what redundancies exist with personnel and distribution centers.

An ATD spokesperson said the company is “working closely with Tires Now and Monro to develop a detailed plan on how we will bring our distribution networks and our teams together following the completion of the transaction.” 

Broderick lauded the work from the Tires Now team, calling the impact of the transaction on its 200-plus employees "an important consideration in the decision to enter this transaction. They have an exciting opportunity to transition with the Tires Now locations and grow their future as part of ATD, an organization that shares our strong dedication to culture and ESG."

Schuette said ATD has "great admiration for the teammates of Tires Now, and we could not be more excited about growing the ATD family. Together, we will serve even more retail locations with even more logistics services and we will continue to lead the pace of change in our industry."

Tires Now distributes around 20 tire brands, including Michelin, Hankook, Falken, Yokohama, Kuhmo, Pirelli, BKT and Cooper.

Earlier this month, Goodyear announced it had begun to distribute Cooper- and Starfire-brand tires to its company-owned retail and commercial outlets through TireHub L.L.C., Goodyear's joint venture with Bridgestone Americas.