Sumitomo Corp. of America-owned TBC Corp. has entered into a deal to buy automotive service and tire retailer Midas Inc. in a deal estimated at $310 million.
In its news release, TBC called the $11.50 per share tender offer a “merger.” The tender offer will be made by March 28, TBC said, and represents a 28% premium over Midas’ March 12 closing price.
The sale of Midas is no surprise; last August the company announced it would “explore and evaluate a range of strategic and financial alternatives,” and hired J.P. Morgan Securities to help it find these alternatives. Midas’ board claimed it involved some 100 “parties” in the process, 36 of which went through a due diligence process.
The purchase valuation of $310 million includes the assumption of some $137 million in Midas debt and unfunded pension liabilities.
The Midas Inc. footprint includes nearly 2,300 franchised, licensed and company-owned shops in 15 countries.
According to both parties, the all-cash deal “has been unanimously approved by the board of directors of both companies. In addition, Midas chairman, president and CEO Alan Feldman has signed a tender and voting agreement in support of the offer.”
“With nearly 2,300 locations worldwide, Midas is a leader in automotive services and we are very excited to welcome such an iconic brand into our portfolio,” said TBC chairman and CEO Larry Day. “By combining the strengths of Midas’ platform with our industry expertise and financial resources, we will build on their current momentum and take the company to the next level.”
TBC’s store holdings include an estimated 580 franchised Big O stores, and 750 owned locations.
The deal is expected to close by July 1. Neither party offered any guidance as to how Midas locations and/or the Midas brand name will be integrated into TBC’s stable of retail brands, which includes the franchise-based Big O Tires, and owned retailers NTB, Tire Kingdom and Merchant’s. TBC’s wholesale arm distributes a range of private and major brand lines, including the Sumitomo brand of consumer and commercial tires.
Sumitomo Corp. of America, the North American subsidiary of Sumitomo Rubber Industries, bought TBC Corp. in September 2005 in a $1.1 billion deal.
