MANAMA, 13 April 2005 — Bahrain-based Investcorp, the global investment group, announced yesterday that it has completed the acquisition of American Tire Distributors, the leading distributor of motor vehicle tires to the replacement market in the United States. This investment is now being offered to Investcorp’s client base.
American Tire has 71 distribution centers and a fleet of 700 trucks providing coverage to 36 US states, and offers 60,000 distinct products serving an average of 35,000 customers each month.
Annual revenue is $1.4 billion giving the company an approximate 6 percent share of the total $24.3 billion market for replacement tires in the United States. American Tire is the market leader with turnover approximately four times the size of its closest competitor.
Founded in 1935, American Tire is the only US distributor that carries the flag brand of the four leading tire manufacturers. The company also offers one of the largest selections of custom wheels with over 140 different styles, and provides related service equipment, tire changers, balancers, wheel weights and tubes.
The company is well placed to expand in what is a fragmented market, yet one that offers historically stable growth, according to Gary Long, chief operating officer of Investcorp: “In 1986, the total market for replacement tires in the US 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 tire will increase as consumers seek higher quality products. The company is forecasting that its own revenue will expand approximately 50 percent 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.
