Key Takeaways
- • Ares Management's Private Equity Group has agreed to acquire a significant stake in American Tire Distributors, resulting in equal 50/50 ownership with current majority shareholder TPG Capital.
- • TPG is divesting approximately 48% of its stake in ATD, effectively reducing its position from majority owner to equal partner while allowing its limited partners to realize substantial returns on their investment.
- • The transaction values the stake being acquired at approximately $805 million, though full deal terms were not disclosed and closing remains subject to certain conditions.
- • American Tire Distributors, one of the nation's largest independent tire suppliers to the replacement market, maintains its existing management team and CEO Bill Berry, positioning the company for continued expansion under dual institutional ownership.
- • The partnership reflects Ares' investment thesis of acquiring strong market franchises with proven management teams, while TPG realizes liquidity while retaining continued exposure to ATD's growth trajectory.
Summary
American Tire Distributors announced on February 3, 2015, that a fund managed by Ares Management's Private Equity Group has entered into an agreement to acquire a significant stake in the company, transforming the ownership structure from TPG's sole majority control to equal 50/50 partnership between both firms. TPG Capital is divesting approximately 48% of its stake as part of this transaction, which sources value at approximately $805 million.
The transaction represents a significant liquidity event for TPG, which has been the primary shareholder and steward of ATD for the preceding five years. Jonathan Coslet, Chief Investment Officer at TPG, emphasized that the partnership allows TPG to offer its limited partners a substantial return on their investment while maintaining continued exposure to what he characterized as a "best in class franchise" with significant growth runway. This structure is strategically advantageous for TPG's fund economics, as it crystallizes gains while preserving upside participation.
For Ares Management, the investment aligns with its stated private equity strategy of acquiring strong market-leading franchises with proven management infrastructure and substantial expansion opportunities. David Kaplan, Co-Founder and Co-Head of Ares' Private Equity Group, noted that ATD's demonstrated track record and market position as a leading tire distributor in North America fit the firm's investment criteria for helping portfolio companies "realize their full potential."
American Tire Distributors' management team, led by President and CEO Bill Berry, will remain in place to execute growth initiatives under the new dual-ownership structure. Berry stated that the company views the partnership as a "significant milestone" in its growth trajectory, combining TPG's five years of operational guidance with Ares' additional expertise and capital resources. The company is positioned as a premier independent tire distributor serving the replacement market.
Transaction closing remains subject to satisfaction of certain conditions. Full financial terms, including the total enterprise value and debt structure, were not disclosed in the announcement.
The transaction represents a significant liquidity event for TPG, which has been the primary shareholder and steward of ATD for the preceding five years. Jonathan Coslet, Chief Investment Officer at TPG, emphasized that the partnership allows TPG to offer its limited partners a substantial return on their investment while maintaining continued exposure to what he characterized as a "best in class franchise" with significant growth runway. This structure is strategically advantageous for TPG's fund economics, as it crystallizes gains while preserving upside participation.
For Ares Management, the investment aligns with its stated private equity strategy of acquiring strong market-leading franchises with proven management infrastructure and substantial expansion opportunities. David Kaplan, Co-Founder and Co-Head of Ares' Private Equity Group, noted that ATD's demonstrated track record and market position as a leading tire distributor in North America fit the firm's investment criteria for helping portfolio companies "realize their full potential."
American Tire Distributors' management team, led by President and CEO Bill Berry, will remain in place to execute growth initiatives under the new dual-ownership structure. Berry stated that the company views the partnership as a "significant milestone" in its growth trajectory, combining TPG's five years of operational guidance with Ares' additional expertise and capital resources. The company is positioned as a premier independent tire distributor serving the replacement market.
Transaction closing remains subject to satisfaction of certain conditions. Full financial terms, including the total enterprise value and debt structure, were not disclosed in the announcement.
Go deeper than the headline
Research every firm in this story, track the ones that matter and get the daily briefing — free for 7 days.