M&A activity remains robust across the industry, with retail leading the way

April 27, 2018

The Merger & Acquisition Environment

The first quarter of 2018 saw the pace of M&A activity remain relatively robust across the industry. Retail led the way in a quarter that saw very meaningful activity, including:

  • Onex/Oncap exiting its investment in Mavis Discount Tire by cutting a deal with Golden Gate Capital and its portfolio holding, Express Oil, to merge the entities, thus creating a retail powerhouse with over 830 locations nationally
  • Kauffman Tire spinning off its 69-location, highly sought-after retail division to Mavis; prior to Mavis further consolidating its new southeast U.S. footprint by acquiring Sun Tire & Automotive Services.

While activity volume is light, huge changes abound in the wholesale segment with Michelin and TBC combining U.S. wholesale operations forming the second-largest wholesale network in North America.

Commercial activity was light, while manufacturing saw consistent transaction volume being led by strategic acquirers (Michelin and Camso) and private equity (Clearlake) alike.

Historical M&A Trends by Period/Sector

Total Number of Transactions

Historical MA Trends by Period-Sector Total Number of Transactions

Double counting of transactions that are included in multiple industry subsectors/categories have been removed.

Transactions Per Sector

Historical MA Trends by Period-Sector Transactions Per Sector

Transaction data for the three-month period from January through March for each of the years listed above.

Retail

Transaction volume remained strong in line with the first quarter of 2017.

2018 Q1 Retail M&A Transactions

2018 Q1 Retail MA Transactions

Golden Gate Capital

In February, private equity firm Golden Gate Capital brokered a deal merging the operations of Mavis Discount Tire with current portfolio company, Express Oil Change & Tire Engineers. The deal combines two of the largest retail dealerships in the U.S., creating a group with over 830 locations across 24 states. Mavis’ current co-CEOs will lead the company, while current Express Oil CEO will serve as executive chairman. The merger seeks to fulfill the shared goals of expanding national footprint, increasing financial strength through economies of scale, and enhancing overall product and service delivery.

Mavis Discount Tire

In two additional first-quarter deals, Mavis acquired Sun Tire and Automotive Services, an 11-store retail chain with operations across Florida, and Kauffman Tire Inc.’s 69 retail stores, located in both Georgia and Florida. These deals, coupled with the Express merger, further position Mavis as a national leader within the retail tire space.

Icahn Automotive Group LLC

Carrying over its robust M&A activity from 2017, Icahn Automotive Group LLC acquired four independent auto service center locations in metro Detroit with the intention of converting the locations to its Pep Boys Service & Tire Centers brand. Geographically, Icahn’s Motor City focus is strategic as it helps to position the company as a market leader within the heart of the U.S. automotive industry. These acquisitions bring Icahn’s Detroit area presence to 14 locations.

Wholesale

M&A activity remained soft in the first quarter, declining from prior years.

2018 Q1 Wholesale M&A Transactions

2018 Q1 Wholesale MA Transactions

Clearlake Capital Group

In March, Clearlake Capital announced its acquisition of Wheel Pros Holdings, LLC, a Colorado-based designer, marketer, and distributor of branded automotive aftermarket wheels, performance tires, and accessories with a portfolio of proprietary brands sporting over 300 customer wheel styles.

NTW

In January 2018, Michelin North America Inc. and Sumitomo Corporation of Americas announced plans to combine their respective replacement tire distribution and related service operations in a 50-50 joint venture. The deal creates the second-largest player in the wholesale tire market in the U.S. The newly formed wholesale unit, branded as NTW, will operate as a company under TBC Corp. The joint venture looks to provide better availability of tire products at all price points across North America, achieve greater scale in wholesale delivery for customers, and enable the two companies to enhance service-quality capacity and overall customer satisfaction.

Commercial/OTR

M&A activity remained light in line with prior years.

2018 Q1 Commercial/OTR M&A Transactions

2018 Q1 Commercial-OTR MA Transactions

Pinnacle Agriculture Distribution, Inc.

In March 2018, Pinnacle Agriculture Distribution, Inc. acquired certain assets of Lake Village Seed & Tire Co., expanding its presence in Arkansas and adding Lake Village’s expertise in front and rear tractor tires for commercial agriculture use to its product and service portfolio.

Manufacturing

M&A activity was solid in the first quarter for the manufacturing segment, led by strategic and private equity acquirers.

2018 Q1 Manufacturing M&A Transactions

2018 Q1 Manufacturing MA Transactions

Camso Inc.

In March 2018, Solideal On-Site Service, the service division of Camso, acquired U.K.-based tire manufacturer Forklift Tyre Specialists Hull Ltd. (FTS). Management has noted the acquisition’s strategic angle, citing both the improved service coverage in the northeastern region of the U.K., and the strong local relationships that FTS now brings to the table.

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