If TPG Capital LP decides to take American Tire Distributors Holdings Inc. public, it might recoup its initial investment and more. Recent acquisitions, however, will make an initial public offering (IPO) less profitable.
The private equity firm purchased the company in June 2010 for $1.3 billion. Add in the cost of ATD's two most recent acqusitions -- $310 million for Hercules Tire Holdings LLC and $345 million for Terry’s Tire Town Holdings Inc. -- and TPG's investment jumps to nearly $2 billion.
TPG has been exploring a possible IPO for ATD, the largest wholesale tire distributor in the United States. ATD posted a net loss of $6.3 million on net sales of $3.8 billion for its fiscal year ended Dec. 28, 2013 (for more information, see "ATD outlines its business strategies in 2014").
In an article published in the evening on May 13, 2014, Reuters, citing "people... asking not to be named because the matter is public," said TPG had not only recently interviewed investment banks for roles in the proposed public offering, but also was evaluating "an outright sale" of ATD.
An ATD spokesperson said the company "cannot comment on matters such as this."