Back / Investments

Investment summary:

Fund: PCI IV

Owning period: 2009-2012

Revenues 2009: 590 MSEK

Revenues 2012: 924 MSEK

Previous owner: Goodyear

Current owner: Pirelli

 

Business description:

Däckia is a leading provider of tyres, tyre changing and tyre storage services to private and corporate customers in Sweden. Its network spans from Ystad in the south to Kiruna in the north of Sweden. The Däckia chain consists of 66 fully owned tyre service stations and over 50 additional partner operated stations across Sweden.

 

Background:

In 2009 Däckia had started the journey towards becoming one of Sweden’s leading tyre changing service chains with 55 stations across the country, but it was struggling with the growth of the company and with successfully taping into the synergies that emerged from being a chain. As Pär Landberg, CEO of Däckia at the time of the acquisition noted, “Our desire to become a professional tyre service chain had led us to take on costs that were too high in relation to the sales. We had built a good platform for expansion but our owner at that time was not interested in growing the business by acquiring additional tyre service stations”.

 

Investment hypothesis:

What we saw at Procuritas was a fragmented market ripe for consolidation. Däckia was in our view, a solid platform from which we could expand by acquiring new stations. Although, the market growth was limited there was potential to gain market share from the fragmented competitor landscape and re-brand the business to fit the high demands of corporate customers in addition to the private user market. Moreover, we saw a huge potential in helping Däckia enhance margins by centralizing functions through central sourcing for example. Finally, we saw that Däckia’s commercial vehicle’s business was at a low following the financial crisis, with potential for a cyclical upturn.

 

Value added:

Just after the acquisition of Däckia we established a value creation plan together with the management team. The plan was focused on three key areas; growth through add-on acquisitions of independent tyre service stations, development of the attractive “between season” tyre storage, and rationalization of cost and capital structure. The idea was to grow Däckia into the undisputed market leader within tyre services and help the company transform into a professional retail chain. We acted as a sounding board to the management team and jointly defined the strategy for the future Däckia including an ambitious acquisition agenda. In addition to the three focus areas defined in the value creation plan, we concluded that corporate clients was a relatively untapped group with large potential. In order to become truly nationwide we established that a franchise model in addition to the current full ownership model would be vital to secure nationwide contracts with large car fleet operators.

 

“Procuritas’ knowledge of business strategy was crucial during the development and execution of our value creation plan. They know these things inside out and were very supportive during the whole process. Moreover, they showed a great interest for our actual business. I still recall when Björn Lindberg, Partner at Procuritas, during our first board meeting, engaged in a discussion of tyre patterns on a detail level that was beyond that of many of our employees! This kind of engagement and detail knowledge is key for retail which is a very detail oriented sector”.

Pär Landberg, CEO at Däckia 2005-2013

 

Result:

During our three yearlong ownership period of Däckia the company acquired 11 tyre service station companies and a logistic center (InterWheel). The company’s revenues grew from 590 MSEK in 2009 to 924 MSEK (57%), while EBITDA nearly tripled, from 28 MSEK to 82 MSEK (193%). The acquisition of the logistic center, InterWheel, enabled the company to centralize logistics which resulted in reduced inventory levels. The freed up space at the tyre stations could be used as “tyre hotels” to host customers’ winter tyres during summer and vice versa. This measure not only enhanced Däckia’s service offering towards customers but also contributed to increased revenues per customer. Moreover, supplier agreements were re-negotiated and centralized, resulting in additionally reduced cost. Däckia’s properties were consolidated into a real estate company and sold as one entity – as property ownership was not Däckia’s core business. The lower cost base and additional cash that was released from the more efficient inventory management and property sales could be used to finance the company’s acquisitions. The company also made sure to execute on the franchise model – partnering up with over 50 tyre service stations and hence enabling a serious partnership with nationwide car fleet operators and other corporate clients. The Däckia-Procuritas team accomplished its five year plan in just three years leading to the decision to divest the company in 2012. The company was acquired by the global tyre manufacturer Pirelli and the Däckia deal was awarded “deal of the year in Sweden” by the Swedish Private Equity & Venture Capital Association. Under its new owner, Däckia continues its remarkable journey and is still the largest tyre service provider in Sweden.

 

“When Procuritas became the new owner of Däckia, the company had approximately 590 MSEK in annual sales and 55 tyre service stations. Three years later when Procuritas sold Däckia, the revenues were closer to 1 BSEK with 66 fully owned stations and more than 50 partner stations – this was truly an amazing journey!”

Pär Landberg, CEO at Däckia 2005-2013

 

Visit Däckia >