International tire giant Michelin acquired 100 percent of tire internet distributor Blackcircles.com for $75.5 million on Wednesday.
Blackcircles was founded in 2002 by entrepreneur Mike Welch and based in Scotland. It recorded revenues of Pounds 28 million in 2013, according to The Telegraph. The company works by selling their tires online and having them outfitted at independent garages across the United Kingdom. Blackcircles did not set its first tire fitting center until last year, and follows in the footsteps of Australian company Tyreright.
This new approach to tire sales has cut consumer costs by 20 to 40 percent. Since 2008, Blackcircles has grown by 20 percent every year up to 2013. The company also sponsored television network ITV’s coverage of Formula E, a racing championship for electric cars.
Michelin is one of the three main tire companies in the world alongside American companies Goodyear and Bridgestone. It has over 110,000 employees and 68 plants in 17 countries. In addition to its purchase of Blackcircle, it also purchased a 40 percent stakes in mid-April for Allopenus, the leading French online tire-sales company.
The purchases of Allopenus and Blackcircles show that Michelin is committed to an online tire strategy. The combination of Blackcircles’s innovative approach to tire fitting along with the strength of Michelin could send waves throughout the tire industry.
Mr. Welch appears to agree. In a statement announcing the acquisition, he declared that he was “very pleased that in Michelin we have found a partner who shares our passion for customer service, innovation and technology.”
Michelin plans for Blackcircles to work closely alongside ATS Euromaster, a major conventional tire company. While Michelin chief operating officer Florent Menegaux stressed to TyrePress that Michelin wants to preserve the Blackcircles name, he did mention how Blackcircles would now gain access to the 343 ATS Euromaster stores in the United Kingdom.
In Michelin’s press release, the tire giant said that the acquisitions of these two online tire companies show that “Michelin is pursuing its objective to address the new expectations of motorists, and in particular to offer them a simple and efficient purchase process and best value.”