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Monro selling wholesale tire distribution business
Monro selling wholesale tire distribution business
Monro, Inc. has sold its wholesale tire distribution assets, which operate as Tires Now, for $105 million in cash to American Tire Distributors (ATD).
ATD will pay Monro $65 million at closing, with the balance of $40 million paid quarterly based on Monro’s tire purchases from or through ATD in connection with a distribution agreement between the two companies.
The transaction is expected to close by the end of the second quarter.
Tires Now operates seven facilities across the southeast, servicing more than 3,500 wholesale customers. With the purchase, ATD strengthens its strategic support of the tire business at Monro’s more than 1,300 retail stores. Both firms says there will be increased operational efficiencies because of the deal.
“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,” Mike Broderick, president and CEO of Monro, said in a news release.
“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.”
Monro said in its financial report that the supply agreement with ATD for tire distribution directly to stores will improve tire availability, allowing automotive undercar service retailer to be a better seller of tires at higher margins. Monro also said the divestiture will enable the company to focus on retail operations.
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