National Tyre & Wheel is poised to snap up the independent tyre distribution chain Tyres4U.
The company has entered a conditional agreement to acquire the business assets of the Australia and New Zealand Tyres4U operations.
In addition to its import and wholesale business Tyres4U operates the Tyreright retail chain, comprising 32 corporate and 34 licensed stores.
National Tyre & Wheel (NTD) imports and wholesales tyres and wheels across Australia, New Zealand and South Africa.
There are synergies expected from the merger of the two businesses which operate in complementary industry sectors, have their own distribution centres in cities and regions, and have no common suppliers.
On top of the diversification the acquisition brings, Tyres4U across Australia and New Zealand brought in a FY200 revenue of $450m.
NTD said in an ASX statement the merged business will become the largest independent multi-branded wholesaler in both nations.
Les De Celis, T4U CEO, said a merger between the businesses had been on the cards for some years.
“We were very enthusiastic back then about the benefits we could deliver to suppliers and customers with an abundance of complementary skills in our teams and no significant overlap of products or suppliers.
“Changes in the industry since then have only made the case for getting together more compelling and we are extremely excited to join with NTD.”
National Tyre & Wheel CEO Peter Ludemann said “Different business models, different products and different routes to market made it immediately obvious that everyone could benefit from getting together, without disturbing our core businesses or values.”
Ludemann said now was a good time to see this through, even though the tyre industry has proved resilient over the last few months.
“There can hardly be a better time to turn diversity and scale into a better outcome for our suppliers, customers, people and shareholders,” he said.
The acquisition is expected to be completed by the end of July 2020.
