Pep Boys Scores Big 10

Auto-parts retailer agrees to buy tire distributor from Sun Capital
Anthony Noto

Sun Capital Partners Inc. has sold Big 10 Tires Inc. to automotive aftermarket retail chain Pep Boys – Manny, Moe & Jack, marking a comeback for the once–shuttered tire distributor.

Terms were not disclosed.

Boca Raton, Fla.–based Sun Capital acquired Big 10 in November 2006. The target company operates in the Southeast – mainly throughout Alabama, Florida and Georgia – providing a variety of auto services including oil changes and brake repairs.

For private equity firms like Sun Capital, that’s an industry well traveled. So many of these suppliers and retailers make up the portfolios of sponsors that bank on the lack of risk associated with the aftermarket and the confidence in consumers who prefer to fix and keep their current vehicles longer as opposed to trading them in.

However, Big 10 didn’t roll through the recession so easily. In June 2009, the Mobile, Ala., company filed under Chapter 11 in the United States Bankruptcy Court for the district of Delaware in Wilmington. Stores were shut down and Big 10 went from roughly 104 locations to its current 85.

And it wasn’t alone. Other replacement part makers or retailers like Proliance International Inc., Visteon Corp. and Autobacs Strauss Inc. also filed around that time.

Proliance, a New Haven, Conn., distributor of aftermarket radiators and temperature control products, filed for Chapter 11 a month after Big 10. Visteon, an original equipment manufacturer (OEM), as well as an aftermarket supplier of auto components, submitted a petition in May 2009. Autobacs Strauss filed in February 2009, about two years after Japanese retail giant Autobacs Seven Co. Ltd. bought the chain out of the bankruptcy of R&S Parts and Service. (R&S sought protection from creditors in August 2006.)

For Big 10, Sun Capital came through. The company secured debtor–in–possession financing from one of the PE firm’s affiliates, which bought its assets out of bankruptcy. Since then, management has been realigned and a campaign was launched to reopen select stores.

“We are confident that Big 10 will continue to perform and grow under its experienced new owners,” Sun Capital vice president Peter Lee said in a statement.

Morgan Lewis & Bockius LLP provided Sun Capital with legal counsel on the deal.

Calls to Pep Boys were not returned. The Philadelphia chain trades on the New York Stock Exchange under the ticker PBY, with a market cap of about $720.6 million. Its shares closed Thursday at $14.01, up 37 cents, or 2.7%.

Big 10 Tires began in 1954 in Pensacola, Fla. It sells Michelin, Bridgestone, BFGoodrich, Firestone, Uniroyal and other brands of tires in addition to providing automotive service.

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