TBC Agrees to Acquire Nation's Fifth Largest Independent Tire Retailer; Purchase of Tire Kingdom Will Expand Marketing Channels to Include Company-Owned Retail Centers
5 June 2000
TBC Agrees to Acquire Nation's Fifth Largest Independent Tire Retailer; Purchase of Tire Kingdom Will Expand Marketing Channels to Include Company-Owned Retail Centers
MEMPHIS, Tenn.--June 5, 2000--TBC Corporation today announced that it has signed a definitive agreement to acquire Tire Kingdom, Inc., a privately-owned independent tire retailer which operates 148 retail centers in the Southeast, for $45 million in an all-cash transaction. The transaction, which will close later today, is being financed primarily through bank borrowings. In a related development, TBC's credit facility has been increased from $100 million to $133 million through a syndicate of banks headed by The Chase Manhattan Bank, N.A. Tire Kingdom, based in Riveria Beach, Florida, generated annual sales in 1999 of $224.0 million. TBC reported net sales for 1999 of $743.1 million.Larry Day, President and Chief Executive Officer of TBC, remarked, "The purchase of Tire Kingdom offers TBC an exceptional opportunity to expand the marketing channels for our proprietary tire brands. The replacement tire market has been consolidating at an accelerating pace in recent years, and we believe it is imperative to use our strong capital base to integrate forward through attractive strategic acquisitions. Big O Tires, which we acquired in 1996, has contributed very favorably to our growth; and the Carroll Tire distribution operations that we purchased in 1998 provided significant impetus to our increased earnings in 1999. Tire Kingdom is a profitable business that ranks as the nation's fifth largest independent tire retailer and commands a prominent share in most of the markets in which it competes.
"We expect this acquisition, which will be accounted for as a purchase transaction, to be accretive to TBC's earnings per share for 2001. The majority of the anticipated synergies from combining Tire Kingdom with TBC relate to procurement savings and cost reductions that we believe are readily identifiable. An important focus for us over the balance of 2000 will be realizing these synergies as quickly as possible. We also expect to benefit from the planned growth of Tire Kingdom which has considerable opportunities to open additional locations in markets it currently serves as well as to expand its geographic coverage. We plan to move expeditiously to realize this expansion potential."
Founded in 1972, Tire Kingdom operates 148 retail tire centers and a specialty wholesale tire distribution business. The company markets a broad selection of high-quality tires under both nationally advertised and private brands. Tire Kingdom's retail centers provide full-service tire replacement including tire balancing, wheel alignment, extended service programs and warranties. The centers also offer under-car maintenance service including brake repairs, suspension system replacement, drive line repair and oil change service. Sales of replacement tires currently account for approximately three fourths of the volume generated from its retail centers. Of the company's retail centers, 144 are located in Florida, and the other 4 centers are in North Carolina.
TBC Corporation is one of the nation's largest marketers and distributors of tires for the automotive replacement market.
This release may contain certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to certain risks, uncertainties and other factors which could cause actual results to differ materially, including but not limited to, the degree of competition in the replacement tire industry, changes in consumer spending on automobiles and replacement automotive products and the Company's ability to continue to obtain products in sufficient quantity and at competitive prices. Additional information on factors that could potentially affect the Company or its financial results may be found in the Company's filings with the Securities and Exchange Commission.