Independent tire retailers pair up

The purchase by Clearwater's Morgan Tire and Auto creates the nation's second-largest independent tire company.

By DAVE GUSSOW

© St. Petersburg Times, published July 8, 2000

After years of watching each other's companies grow, Larry Morgan and Tom Gegax decided it was time to join forces. So this week Morgan Tire and Auto of Clearwater bought Gegax's Tires Plus, based in Burnsville, Minn.

The deal will create the second-largest independent tire retailer in the country under the name Tires Plus Auto Service. That means Morgan's bay area outlets, now known as Don Olson Tire and Auto Centers, eventually will be renamed.

Larry Morgan, chief executive of Morgan, and Tom Gegax, chairman of Tires Plus, the largest tire retailer in the upper Midwest, called the merger "a perfect fit" because the chains operate in separate regions but share similar business approaches.

Consolidation in the automotive parts and service industry has been going on for years. Morgan has seen his company grow from eight stores in 1972 to almost 300 at the end of 1998 -- and to 540 in 24 states after Tires Plus' 140 stores join the chain, which will have revenue of $745-million. Terms of the deal were not disclosed.

The merger gives "the companies more buying clout with manufacturers and can cut certain duplicative (operating) costs," said Dave Zielasko, editor and publisher of Tire Business, a trade newspaper in Akron, Ohio.

If the company gets lower prices on tires and auto parts, Morgan said, it can offer lower prices to consumers. Additionally, its warranty program may be more meaningful to customers knowing that it has more stores around the country. And customers will see more subtle changes as well.

"One thing we have learned from acquisitions is we learn from each other a better, improved way of serving our guests," Morgan said. He talked enthusiastically about terminology Tires Plus uses that will be adopted by the merged company. Customers will become "guests," employees will be "teammates," and managers will be team "coaches."

Not all of Gegax's unconventional management techniques may be imported to the Don Olson outlets, though. Gegax gives his Midwestern workers time for meditation, shiatsu massage and nutrition classes. "It is Zen and the art of the tire business," the New York Times reported last year.

Morgan will be the chief executive of the combined company and Gegax the chairman. It will have its headquarters in Clearwater and probably will add about 40 jobs here, Morgan said.

Some jobs in Minnesota will be eliminated, though some employees may be offered transfers to Florida or to store locations. Many of Tire Plus' 1,600 employees will split about $9-million in stock options or loyalty and transition bonuses when the merger is completed, Gegax said.

Dropping the Olson name "was purely our decision," Morgan said. "We needed a national name." The change will occur over two years, "and we won't do it until existing customers know what we're doing."

This deal won't be Morgan's last. "The plan is to grow, absolutely," Morgan said. "Our schedule by 2004 is to be right at 1,000 stores."

That will include building about 50 stores a year and buying "when right ones become available at the right place," said Morgan, adding that he wants to adopt Tires Plus' plan for franchises.

Leading up to the merger, Gegax said he watched as Morgan expanded his company.

"He did it faster and I believe he did it in a better way." He called Morgan "the Wayne Huizenga of the tire industry."

- Information from the St. Paul (Minn.) Pioneer Press was used in this report.

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