Continued Activity Across Sectors Drives Tire Industry in Q2

The second quarter of 2019 saw the pace of M&A activity taper from the highs of 2017 and 2018 to levels more in line with what the industry experienced in 2015-2016. Although total transaction volume remained light relative to the past two years, the second quarter saw more meaningful activity from Monro, which expanded its network to 1,240 locations in 30 states. Similar to the first quarter of 2019, the commercial/OTR segment saw yet another Bridgestone GCR divestiture, selling off 13 commercial and 3 retread locations to McCarthy Tire. Both the wholesale and manufacturing segments saw notable transaction activity from K&M Tire and sponsor-backed Wheel Pros, respectively.

Key Takeaways:

  • Continued acquisition activity on the retail front, with large players aggressively pursuing nationwide expansion strategies
  • Normalization of second-quarter transaction volume versus the prior two years
  • Activity both domestically and abroad, with a majority of M&A completed by strategic buyers
  • Positive macroeconomic trends, despite pockets of turbulence regarding tariffs and political uncertainty

Historical M&A Trends by Period / Sector

Total Transaction Count

Q2 2019 Total Tire Transaction Count

Note: Double-count of transactions which are included in multiple industry sub-sectors/categories, have been removed.

Transactions per Sector

Q2 2019 Tire Transactions per Sector

Note: For the 3-month period from April 1 – June 30 for each of the years listed above.

Retail

Retail M&A Transactions - Q2 2019

Q2 2019 Tire Retail MA Transactions

** Indicates transactions occurring in the first quarter of 2019 that were not captured in the Q1 report

Driven Brands Inc.

In June, Driven Brands Inc. announced its acquisition of Advance Kwik Lube, a 25-outlet automotive services chain with operations throughout Texas. Driven expects to convert the outlets to its Take 5 Oil Change brand over time. This is the second acquisition for the Take 5 brand this year, following February’s purchase of Super-Lube, a 48-location retail services chain with operations in Florida, Illinois, Indiana, and Wisconsin. The acquisition expands Take 5’s network to 375 locations across the United States.

The Tire Choice & Total Car Care (Monro)

Monro, Inc. has continued executing on its aggressive acquisition strategy in the second quarter, this time through its Tire Choice brand, which announced its acquisition of Allied Discount Tire & Brake in April. The acquisition of Louisiana-based Allied adds 12 locations to Monro’s portfolio and extends the retail giant’s reach into Louisiana. Monro’s second-quarter efforts bring the company’s combined presence to more than 1,240 stores, 98 franchised locations, eight wholesale locations, and three retread facilities across 30 states.

Wholesale

Wholesale M&A Transactions - Q2 2019

Q2 2019 Tire Wholesale MA Transactions

K&M Tire Inc.

K&M Tire Inc. has agreed to acquire Michigan-based Cadillac Wholesale Tire Inc., one of the state’s leading distributors of passenger, light truck, truck, and farm tires. The acquisition adds a 25,000-square-foot warehouse to K&M’s portfolio, expanding its presence to three distribution centers in Michigan, and a total of 30 wholesale distribution locations serving customers across 27 states.

Commercial / OTR

Commercial/OTR M&A Transactions - Q2 2019

Q2 2019 Commercial OTR Tire MA Transactions

** Indicates transactions occurring in the first quarter of 2019 that were not captured in the Q1 report

McCarthy Tire Service

In June, McCarthy Tire Service announced its acquisition of 13 GCR Tires & Services stores along with three retread plants from Bridgestone Americas. This is McCarthy’s second acquisition of GCR assets in the past two years, with McCarthy picking up six GCR locations in the third quarter of 2017. Pennsylvania-based McCarthy now operates 60 service locations and 10 retread plants in eight states across the East Coast. This most recent divestiture brings Bridgestone’s total GCR footprint to slightly more than 100 locations, down from its peak of more than 200 locations across the U.S. and Canada.

Manufacturing

Manufacturing M&A Transactions - Q2 2019

Q2 2019 Tire Manufacturing MA Transactions

Wheel Pros, LLC

Wheel Pros, LLC, a portfolio company of private equity firm Clearlake Capital, acquired MHT Luxury Wheels, an industry-leading custom wheel manufacturer and distributor of state-of-the-art custom wheels across all major vehicle segments. The combined company will operate under the Wheel Pros name, offering 22 brands, approximately 15,000 SKUs, and will sell its products through a footprint of 30 national and three international distribution centers, as well as direct to consumers through online channels.

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