Photo above:(L-R) Lewis Wexler, Sr. Susan Wexler, Harrison Wexler, Lewis Wexler, Jr.
Monro, Inc. (NASD: MNRO), the nation’s largest independently owned and operated auto service chain last week closed the purchase of 99-year-old Johnson City, Tenn.-based Free Service Tire Company. Monro will keep the Free Service branding in place along with 96 percent of the existing Free Service employees. The transaction closed on May 13, and is expected to add approximately $47 million in annualized sales, representing a sales mix of 15 percent service and 85 percent tires to Monro.
“This acquisition expands our footprint in the South, while providing Monro with an even stronger platform for further growth in these markets,” said Brett Ponton, president and CEO of Monro. “Equally important, we are extremely pleased to welcome these outstanding teammates and locations to our company, and look forward to working with the entire Free Service Tire team.”
Free Service Tire Company operates 10 retail tire and service centers in Tennessee along with two commercial service centers and two tire retreading centers as well as four wholesale tire distribution centers in Tennessee and in Roanoke, Va., and Asheville, N.C.
With more than 1,160 owned stores, 98 franchise locations, and nine wholesale locations across 27 states, Monro has grown into one of the leading automotive service and tire companies in the country, generating record revenue of $1.12 billion in fiscal 2018.
“Lots of times people get into a situation where they have to sell a business. For us it was a decision, though a very hard decision,” said Lewis Wexler Jr., who will transition from CEO of Free Service to a consultancy deal with Monro. “It was something we had to think about long and hard. This wasn’t something we had been planning on doing for a long time.
“We had thought maybe ten years from now or somewhere way out in the future when I was in my mid-60s that maybe my brother (Harrison Wexler, who will transition to a position with Monro) would buy me out, but we had never talked about selling the company. It was something that caught me by surprise.”
That having been said, there appeared to be headwinds on the horizon for companies like Free Service, Wexler said. “There’s already been a lot of consolidation. TBC, a big company in the tire space and Michelin merged at the beginning of the year. I saw that and I said, ‘Wow, that’s a big change in our business.’ A big competitor, Tire Discounters, announced they were going to move into the Knoxville market, which is our strongest market. Several companies like ours have been purchased. There were a lot of signs that a wave of change was coming. And I’ve seen more change in the last year than in any previous five years.”
Tax changes at the end of 2017 made it more beneficial for larger companies, like Monro, to consider making new acquisitions, Wexler said. “I’ve been in a buying group with Monro for many years. So, around the beginning of this year we started talking.”
The company will remain, “pretty much intact,” Wexler said. “The name will remain Free Service Tire Company for the foreseeable future. The buildings will remain the same. It is an opportunity for them to give our employees and our customers a better buying experience and better resources.”
Certainly in a company of 14,000 employees, there will be more opportunities for advancement, Wexler said. “With our company the ladder wasn’t quite as tall.”
There were obvious synergies between the two companies, Wexler said. “They have a large retail store chain with many different formats and our format fits that. In recent years they acquired several other companies that have commercial businesses and our company has a commercial business. The same holds true for wholesale business. So, they were able to buy our entire company instead of just pieces of it.”
Though almost all of Free Service’s employees will transition to Monro, a handful will not. Wexler said those few individuals are corporate staff whose positions’ work is already done at Monro’s corporate office. “We’ve worked with each of them to try to set up a situation to bridge their current situation to a new opportunity and environment.” Monro has also guaranteed no Free Service employee will make less money this year than last, Wexler said.