ATD acquires Monro’s Tires Now business

American Tire Distributors (ATD) has entered into an agreement to acquire Tires Now, the wholesale tyre distribution business of automotive service and tyre provider Monro, Inc. The transaction brings seven Tires Now facilities across the Southeastern USA, which service more than 3,500 wholesale customer sites annually, into the ATD fold. In addition to servicing these wholesale customers, ATD will now also strengthen its strategic support for the tyre business conducted at more than 1,300 Monro retail outlets.

“With the addition of Tires Now, we are taking another important step in ATD’s transformation journey,” says Stuart Schuette, president and chief executive officer of ATD. “We are adding volume and geographic reach that will make us an even stronger supply chain partner to our customers and the manufacturers with which we work. We also view this as a win for the tyre supply chain network and a step forward for both ATD’s and Monro’s commitments to sustainability. This transaction will support ATD’s ESG and current emissions efficiency initiatives, and together with Tires Now, we will be able to better reduce overall emissions. This is a truly unique opportunity, and we look forward to working closely with Monro, as well as our other customers, to provide our full platform of ATD’s logistics services.”

Schuette adds: “We have great admiration for the teammates of Tires Now, and we could not be more excited about growing the ATD family. Together, we will serve even more retail locations with even more logistics services and we will continue to lead the pace of change in our industry.”

Exciting opportunity to transition

“By transitioning our Tires Now assets to ATD, we are doubling down our focus on our retail footprint while gaining the financial and operational flexibility to continue executing our plans,” says Mike Broderick, president and chief executive officer of Monro. “We have worked with ATD for almost 20 years. We are excited to build on our relationship as we leverage their logistics network and innovation to better serve our growing group of retail customers with the highest standards of service. We also are pleased by the sustainability benefits of this transaction, including emissions reductions.”

Broderick continues: “Our teammates are our greatest strength, and we are grateful for the contributions made by the Tires Now teammates. The impact on these teammates was an important consideration in the decision to enter this transaction. They have an exciting opportunity to transition with the Tires Now locations and grow their future as part of ATD, an organisation that shares our strong dedication to culture and ESG. This transaction demonstrates our commitment to delivering best-in-class service, identifying value-enhancing opportunities, and driving shareholder value.”

Transaction details

Under the terms of the transaction, ATD will pay Monro US$105 million in cash for the assets operating as Tires Now and for certain assets under Monro’s internal tyre distribution operations, subject to customary escrow arrangements. The agreement provides that $65 million will be paid at closing and the remaining $40 million will be paid quarterly based on Monro’s tyre purchases from or through ATD in connection with a distribution agreement that ATD and Monro are also entering into.

The transaction is expected to close by the end of June 2022, subject to clearance under the Hart-Scott-Rodino (HSR) Antitrust Improvements Act of 1976, as amended, and other customary closing conditions.

Troutman Pepper is serving as legal counsel to ATD. Harter Secrest & Emery LLP is serving as transaction counsel to Monro, with Gibson, Dunn & Crutcher LLP serving as HSR counsel.