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ATD Expands Its Presence Into Canada

Charlotte, NC-based American Tire Distributors has acquired the assets of TriCan Tire Distributors based in Edmonton, AB for US$97.50 million in a cash transaction. The purchase price is subject to certain post-closing adjustments, including working capital adjustments.

This marks ATD’s entry into the Canadian market, as well as the first time the company has expanded its distribution services beyond the borders of the United States. TriCan is a leading Canadian tire distributor with 15 distribution centers stretching across the country.

“Given the similarities of Canada’s retail structure and leading tire brands, expanding ATD’s footprint and distribution services into Canada represents a natural step for the company’s growth plan,” explained Bill Berry, president and CEO of ATD. “After thoroughly evaluating the marketplace, it became clear that TriCan was going to be the best partner for us in Canada.”

The company plans to operate TriCan as a standalone business unit. TriCan will retain its name and its management team, led by Chris Fletcher, who has been president of the company since 2006.

ATD plans to begin expanding TriCan’s existing distribution centers in 2013 to support a broader product offering. Management also plans to add several new distribution centers across Canada by opening greenfield locations and potentially acquiring other Canadian distributors.

ATD is one of the largest independent suppliers of tires to the replacement tire market. The company operates 102 distribution centers servicing 45 states. It employs 3,000-plus people across its distribution center network, including more than 300 people at its Charlotte-area field support center, distribution center and regional hub.

For the third quarter ended Sept. 29, 2012, ATD’s sales rose $84.40 million, or 10.2 percent, to $915.34 million in the quarter. The increase came primarily from new distribution centers opened since the beginning of 2011, as well as the acquisition of Consolidated Tire & Oil. These growth initiatives added $41.90 million in incremental sales in the third quarter of 2012. In addition, higher net tire pricing of $37.20 million contributed to the increase.

Despite the double-digit jump in net sales, ATD reported a net loss of $10.60 million, compared to $1.48 million in net income from a year ago.

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