Mavis Tire Express Services Corp.’s recently finalized purchase of 595 TBC Corp.-owned retail tire stores “is a sign that strategic acquirers are still looking to get bigger.”
That’s analyst John Healy’s take on what the deal signifies to the tire industry.
“The economy is not deterring companies from moving on their long-term visions.” says Healy, who also writes MTD’s monthly Your Marketplace column.
That said, “I don’t see how this really impacts independent tire dealers who are competing against” Tire Kingdom and NTB stores, since those locations were already active in their respective markets, says Michael McGregor, a partner at Focus Investment Banking and author of MTD’s monthly Mergers and Acquisitions column.
“I don’t see (individual markets) getting more competitive or less competitive” when Mavis takes over those locations, he adds.
Healy and McGregor – along with Dennis McCarron, partner at Cardinal Brokers and MTD’s monthly Business Insights columnist – believe the acquisition is a positive move for both Mavis and TBC.
“It sounds like TBC wants to focus on distribution and wholesale and they no longer have to deal with the headaches of (company-owned) retail,” says McCarron. “Mavis gets to go into new markets and bolster existing markets they have.”
“If you look at TBC, they’ve been signaling that they’ve wanted to do this for a while,” says McGregor. “They’ve converted select stores to Big O franchises.” (Note: TBC owns the Big O Tires and Midas franchise programs.)
“They’ve encouraged Big O franchisees to take on certain markets. And then in 2020, they sold 112 NTB stores to Mavis. They made a decision between being a franchisor of Big O and Midas or being (in) company-owned (retail), and they decided they’d rather be a franchisor.”
Opinions vary on whether Mavis will allow NTB and Tire Kingdom stores to retain their names or if those locations will convert to the Mavis brand and format.
“Will the acquired brands become part of a featured brand strategy or will they operate autonomously?” says Healy.
“Mavis buying these stores obviously gives them more scale, but I’m not sure it gives them much different terms than they were probably already getting from vendors and sourcing.
“But typically, one brand is something we’ve seen other companies migrate to over a period of time.”
“Is there value in changing over to the Mavis name or is there inherent value in keeping the NTB and Tire Kingdom names?” asks McCarron.
“When Bridgestone took over Tires Plus many years ago, that was a 500-store acquisition and they left the Tires Plus name. In their eyes, the (Tires Plus) customer was a different customer. The powers that be said, ‘We’ll leave it.’
“Then you have Monro, which has (multiple) brand names. This is a big enough deal where the NTB and Tire Kingdom names might carry some weight. If I was a gambling man, I’d say Mavis is probably leaning toward keeping those names.”
“I fully expect the NTB brand to go away after a while,” says McGregor. “The Tire Kingdom brand is iconic in Florida. I would keep that brand alive to see what else you can do with it. Perhaps at some point, Mavis will want to employ the strategy that Monro has, where they have multiple brands in certain markets?
“I’d love to see the Tire Kingdom brand stay alive - not just in Florida, but perhaps expanded into other areas.”
Experts agree it will take some time for Mavis to “digest” its latest acquisition.
“There’s a lot to take on,” says McGregor. “It could take several years.”
“The details of marketing, signage, inventory plans, point-of-sale kits – there are a lot of things that need to be reconciled,” says McCarron.
“My guess is Mavis is going to look at the sheer size of what it’s bringing in,” says Healy. “And I would think this probably puts Mavis on the shelf for a little bit, as far as being an acquirer. But you never know.”
