Les Schwab Tire Centers' owner considers sale valued at over USD 7 billion

Meritage, the investment firm that acquired the tire retails chain Les Schwab Tire Centers, is reportedly looking to sell it with enterprise value over USD 7 billion including debts. Speaking on condition of anonymity, sources privy to the information disclosed that Meritage has retained Goldman Sachs to oversee the sell-side. The action is likely to garner interest from private sales companies and other tire selling companies. Interviews with the relevant market players, whose identities were not disclosed because the negotiations are still in a rather sensitive stage, revealed that a sale is not guaranteed.

Mohamed El-Erian; Meritage Group – Nat Simons, billionaire who had started the company after moving out from Renaissance Technologies in 1997, has bought Les Schwab Tire from the Schwab family in 2020 for a hefty amount of USD 3 billion. Goldman Sachs and Les Schwab Tire did not wish to comment on the sale, and Meritage Group and Nat Simons have not deemed it fitting to pass a comment on the issue.

A company known as Les Schwab Tire was founded in Bend, central Oregon, and it has branch s over 500 stores in 13 western states in the united states of America and its total employment is over 7000 people. Such company, with the annual income of about USD 500 million of EBITDA, could expect a valuation of some 15 times the EBITDA level, according to the sources.

Originally established in 1952 by Les Schwab, the tire retailer is one of the biggest in the United States of America facing other companies from the private sector like Mavis Tire and Discount Tire. The industry is defined by the tire and auto service sector and has remained popular among private equity firms because of its relatively stable cash flows that are considered relatively insulated from tumultuous economic period and the threat of the shift towards online shopping.

Recently, private equity increases its activity in the tire industry, specifically BayPine and TSG Consumer Partners bought Mavis Tire in 2021 for more than USD 6 billion.

Meritage Group, which manages approximately USD 12 billion in assets, invests across various sectors, including public and private equity, credit, and real estate, with offices in New York City, San Francisco, and Greenwich, Connecticut.