American Tire Distributors (ATD) has entered into a definitive agreement to acquire Monro Inc.’s wholesale tire distribution assets, operating under the Tires Now name, for $105 million in cash — $65 million payable at closing with the remaining $40 million to be paid quarterly. The business was deemed to be “non-core” by Monro’s management.
The transaction is expected to close by the end of the second quarter of calendar 2022, subject to regulatory approval and other customary closing conditions.
Tires Now operates seven facilities across the Southeast, servicing more than 3,500 wholesale customer locations annually.
As part of the transaction, Monro and ATD are to enter into a supply agreement that will result in better availability of tires, quicker delivery and better pricing for Monro, according to its president and CEO, Mike Broderick.
“It had become very clear after an exhaustive review of our wholesale locations that we were too small to be an effective competitor,” Broderick told analysts on the company’s May 19 earnings call. “In addition, we found that we could get much better service from a large national distributor than we could provide by doing it ourselves.”
“Beyond the financial benefits, this divestiture will enable us to sharpen our focus and resources on our retail operations,” Broderick said in a press release dated May 19. “The proceeds, along with cash generated from operations, will allow us to return capital to shareholders through healthy dividend and share repurchase programs as well as capitalize on acquisitions.”
