TBC Corporation (Nasdaq: TBCC), one of the nation's leading marketers of automotive replacement tires, today announced that it has entered into a definitive agreement to acquire Merchant's, Incorporated, a closely held tire retailer and automotive service provider headquartered in Manassas, Virginia. Merchant's, with 112 company-operated stores, is the sixth largest independent tire retailer in North America with retail sales of more than $150 million in 2002. The acquisition will be an all-cash transaction, with approximately $57.5 million being paid within 30 days of closing and additional consideration of up to $15 million being paid in future years based upon the performance of the acquired stores. The transaction, which is subject to approval under the Hart-Scott-Rodino Act as well as other customary closing conditions, is expected to be completed by April 1, 2003. With the addition of the Merchant's retail locations in Virginia, Maryland, North Carolina, South Carolina, Pennsylvania, and Washington D.C., TBC will strengthen its position as the nation's largest independent tire retailer with more than 880 locations. TBC's retail operations currently include 228 company-operated Tire Kingdom stores and 543 franchised locations under the "Big O Tires" name. In 2002, TBC Corporation reported total net sales of $1.1 billion, with retail net sales of more than $500 million. Larry Day, TBC President and CEO stated, "We are delighted with this acquisition, as it enables us to grow our retail platform in new and existing markets while realizing substantially greater purchasing leverage and distribution economies. Merchant's is a highly regarded and well-established tire and automotive service retailer with a 60-year operating history and an established staff of automotive professionals. Its clean, modern stores complement our Tire Kingdom locations in the Carolinas and expand our retail presence contiguously into Virginia (57 locations) and Maryland (23 locations). "As part of our Tire Kingdom retail network, the Merchant's locations will benefit from the Tire Kingdom operational infrastructure in areas such as management, systems, and marketing. Within the first three months of the acquisition, for example, we expect to have the Merchant's locations fully integrated into our POS system." Consistent with the Company's acquisition criteria, TBC expects the Merchant's acquisition to be accretive to earnings by the twelfth month after the close of the transaction. As a result of the timing of the acquisition, the Company is modestly adjusting its earnings guidance for the year 2003 to a range of $1.34 to $1.38 per diluted share from its previous forecast of $1.38 to $1.40. Based on current projections, TBC expects the acquisition to be accretive to 2004 annual earnings by at least $0.10 per share. Mr. Day concluded, "An important focus for us over the remainder of 2003 will be to realize the anticipated operating synergies as quickly as possible. Our demonstrated success in executing our marketing and operational strategies following the June 2000 acquisition of Tire Kingdom gives us great confidence in our ability to assimilate the Merchant's stores into our retail system. We are excited about this significant growth opportunity and, with the continued support of our capital providers, believe we are well-positioned to further expand our leading role in the tire industry."
Big O Tires News and Press Releases
This article has been read 2417 times.
Would you like to own a Big O Tires Franchise?
For more information about becoming a Big O Tires Franchise owner, including a franchise overview, start-up costs, fees, training and more, please visit our Big O Tires Franchise Information page.
Updated Recently