Investcorp, the asset management firm specialising in alternative investments, said its US portfolio company, American Tire Distributors, has acquired Am-Pac Tire for an enterprise value of $75 million.
The acquisition will enable American Tire to offer a wider product range and distribution network to its dealer customers, and is expected to strengthen American Tire’s US market position.
This acquisition reflects Investcorp’s strategy of making add-on investments to its portfolio companies to increase value, especially during the current economic conditions, which are generating interesting buying opportunities.
American Tire, which was acquired by Investcorp and its investors in 2005, is the leading distributor of replacement tires in the United States.
Founded in 1935, with headquarters in North Carolina, American Tire distributes a wide range of tires, custom wheels and related service equipment and supplies, principally to independent tire dealers throughout the United States.
Am-Pac Tire has its headquarters in Simi Valley, California and generates approximately $300 million in revenue.
It is considered an attractive acquisition due to its complementary geographic overlap, brand and product range that will significantly strengthen American Tire’s position in existing markets, as well as enabling it to expand into St. Louis and western Texas.
Timothy Mattar, managing director and head of Investcorp’s placement business in Bahrain, Kuwait, Qatar and Oman, said: “In this economic environment we must clearly do all we can to stand by and support our portfolio companies. This includes working alongside their management teams to manage liquidity and risks and maintain capital cushions, while also searching for opportunities to make add-on investments to maintain growth.
“Add-on acquisitions have always been an important part of Investcorp’s value enhancement model, but provide an even more meaningful value addition in current market conditions, given the more reasonable valuations of companies we can acquire.”
Given current operating conditions in the US and Europe, Investcorp is working closely with its portfolio company management teams to manage costs tightly and ensure sufficient liquidity to continue to execute value creation plans such as making add-on acquisitions.
Investcorp portfolio companies have made a number of such add-on acquisitions during the last six months. FleetPride, the Investcorp-owned US distributor of truck and trailer parts, has acquired Truck and Trailer Supply, Bound Brook Safety Co, E H Burrell Co and Automotive Brake Company.
Meanwhile, Investcorp plans to raise at least $250 million capital after a loss of $526 million on bad investments pushed the Bahrain-based investment bank deep into the red in its first half as its portfolio companies were hit by the global economic turmoil.
Investcorp ruled out selling portfolio companies to improve its liquidity position. “If your question is, are we selling assets at distressed prices in order to get liquidity the answer is no, we’re not going to do that.” chief operating officer Gary Long said.