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Report: ATD Shopping for New Owner

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A new report by the Wall Street Journal late yesterday says that American Tire Dealers is being shopped to other private equity firms and could bring “more than $3 billion.”ATDlogo

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Citing “people familiar with the matter,” the WSJ said that ATD has been “quietly running an auction for the company, with second-round bids due in the past week.”

It was in June that ATD owner TPG Capital L.P. set plans for an IPO to take the tire distribution giant public. Now it appears any IPO is off the table for now, as TPG fields offers for ATD.

No timetable for any possible sale was set, and ATD has made no public comment.

Over the last decade, ATD has had numerous owners. In March 2005, an investment group consisting of Investcorp Bank BSC, Berkshire Partners and Greenbriar Equity Group paid some $500 million for ATD, buying it from Boston-based Charlesbank Capital Partners. Five years later, the Investcorp group sold ATD to TPG for an estimated $1.3 billion.

During that same 10-year period, ATD has grown radically and rapidly, shedding a cumbersome retail tire and service business while buying up a number of independent tire wholesalers and opening its own new distribution centers. Among its acquisition gems were Am-Pac Distributors in 2011, expansions into Canada, and paying more than $600 million earlier this year to take Hercules Tire & Rubber Co. and Terry’s Tire Town.

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Just a week ago, ATD reported first half 2014 sales of $2.34 billion, but a net loss for the period of $85.6 million. While the recent acquisitions added $1.27 billion on the sales side, costs associated with the purchased dragged on profits.

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