January 25, 2021

Michelin and Sumitomo Create Major Wholesale Player in U.S. and Mexico

Michelin and Sumitomo are to create a major wholesale player in U.S. and Mexico
Michelin and Sumitomo are to create a major wholesale player in U.S. and Mexico

Michelin North America Inc. (MNAI) and Sumitomo Corporation of Americas (SCOA) have announced they are to combine their respective North American replacement tyre distribution and related service operations in a 50-50 joint venture, forming the second-largest player in the wholesale tyre market in the United States.

The partnership will bring together MNAI’s TCi, the fourth largest wholesale tyre and service network in the United States, with more than 85 locations, with SCOA’s TBC, one of the nation’s largest vertically integrated marketers of tyres for the automotive replacement market, with 59 wholesale distribution centres and more than 2,400 North American retail locations.

The companies say that strategic benefits of the transaction are expected to include:

  • The joint venture will be a more competitive player in the growing North American tyre wholesale and auto services sector. The joint venture includes TBC’s Mexican wholesale business, TBC de Mexico.
  • The deal will allow both companies to more effectively satisfy the needs of online consumers by combining distribution, reach and speed.
  • The joint venture will provide a foundation for coast-to-coast coverage of car and light truck service providers, addressing trends of growth in fleet maintenance and increasing complexity of service requirements and tyre sizes.
  • The transaction will increase the companies’ market share and operational scale, positioning the joint venture for faster growth.

The joint venture will be managed under the direction of a six-member Board of Directors. Upon closing of the transaction, MNAI and SCOA will each appoint three members of the Board.

The transaction is subject to customary approvals.