Investcorp Acquire American Tire

Investcorp, investment group, has officially acquired American Tire Distributors, one of the leading distributors of tyres in the United States.

American Tire has 71 distribution centers and a fleet of 700 trucks providing coverage to 36 US states. It offers 60,000 products serving an average of 35,000 customers each month says the investment company. Annual revenue is $1.4 billion giving the company an approximate six per cent share of the total $24.3 billion market for replacement tyres in the US.

Gary Long, chief operating officer of Investcorp commented: “In 1986, the total market for replacement tyres in the USA was 164 million units, a figure that had grown to 234 million units by 2004. American Tire predicts this growth rate to continue, while the average cost of a replacement tyre will increase as consumers seek higher quality products. The company is forecasting that its own revenue will expand approximately 50 per cent over the next five years.

”American Tire’s expansion plans anticipate both organic growth and entry to new areas through acquisition. Greater penetration of existing brands, a focus on higher-margin business, as well as the forging of relationships with car dealerships, will achieve organic growth. American Tire recently reached agreement with General Motors to supply the motor manufacturer’s 4,000 dealerships in the US, and is looking to establish similar arrangements with other motor manufacturers.”

Two Investcorp advisory directors, Stephan Kessel, past Chief Executive of Continental AG, and Alain Reheuil, CEO for Europe sales marketing and distribution at Michelin, were involved in evaluating this acquisition. They will also apply their experience to assist American Tire’s management team in capitalising on the company’s strong competitive position said Investcorp.