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Discount Tire Centers’ Parent Makes Offer for Rival Big O

TIMES STAFF WRITER

The parent company of Discount Tire Centers said Tuesday that it has made an offer to buy rival Big O Tires, a consolidation that would create a chain with 500 outlets across the West and Midwest.

Big O officials said they don’t know enough yet about the suitor, AKH Co. of Anaheim, to comment on the offer. In particular, they said, they want to know more about AKH’s financial condition, which the privately held company so far has declined to disclose.

The offer is the latest development since Big O’s directors decided in June to seek bids. The board did so at the urging of Balboa Investment Group LP in Newport Beach, which controls about 10% of Big O’s stock and is its second-largest investor behind the company’s own employee stock ownership plan.

In AKH, Big O would have a partner that operates 130 stores in California, Oregon, Washington and Utah under the names Discount Tire Centers and Evans Tire & Service Centers. Big O, based in Englewood, Colo., has 370 stores in 18 states, mostly in the West and Midwest.

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In a press release Tuesday, AKH President Andy Andonian said that the consolidation of the two companies would create the nation’s largest independent tire chain. He said the AKH offer is for an “unspecified cash consideration” and that the deal would be subject to certain contingencies, such as obtaining financing.

AKH is owned and operated by three brothers: Andy, Hratch and John Andonian.

The company submitted its offer for Big O “several days ago,” said Beth Hayne, Big O’s investment relations manager. The board appointed a consultant and an outside director, she said, to seek more information about AKH.

Tuesday’s announcement by AKH caught Big O officials by surprise, Hayne said, adding:. “We’re still trying to figure out what it means.”

Balboa Investment’s managing partner, Kenneth Pavia Sr., said Tuesday that he is pleased with AKH’s interest.

“I always felt that it would be in the best interests of the shareholders to enter into a strategic combination of some sort, and I felt Big O lacked the critical mass it needs to compete effectively in the tire business in the ‘90s,” Pavia said. “So any alliance that solves those concerns should be fully explored.”

For now, Pavia said, Big O “wants to fully explore not only the level of the offer, but negotiate to additional levels and make sure that . . . AKH can perform under terms of the contract.” Pavie said he is familiar with AKH’s offer but could not disclose the terms.

In Tuesday’s Nasdaq trading, Big O’s stock closed at $17 a share, up 50 cents.

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