French tyre company Michelin acquires Blackcircles.com

08 May 2015

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French tyre company Michelin has acquired online tyre retaile Blackcircles.com, the principal internet tyre sales company in the UK, for £50 million.

The Edinburgh-based company run by Mike Welch generated £28 million in revenue in 2013.

"I'm delighted to have found in Michelin a partner who shares our passion for customer service, innovation and technology," he declared.

"The strength of the Michelin Group will allow us to underpin the multi-brand offering that we deploy in each garage, on every street corner. I am convinced that our teams, our customers, our garages and our suppliers will rapidly start to see the benefits of this partnership."

With the acquisition, Michelin would be expected to improve the performance of its mix of distribution channels in the UK, and in particular to develop synergies with its traditional distributor, ATS Euromaster.

This comes after the acquisition of a 40-per cent stake by Michelin in mid-April in Allopneus, the leading French online tyre sales company.

Meanwhile, Welch can look to gain a third of that sale price, while staying with the company.

Welch started selling tyres aged 16 before joining Kwik-Fit and at 21 set up Blackcircles in 2001 with a first-year turnover of £10,000. .

Welch, now aged 36, built it up to annual sales in 2013 of £28 million, with annual growth of around 20 per cent per year since 2008. The first three months of this year saw revenue increase by 34 per cent on the same period last year.

The ''click and fit'' business model developed by the company allows customers to choose their tyres online. The tyres are then delivered directly from garages, where the customer then booked in a tyre-fitting session.

According to Welch, prices undercut conventional sales by 20 per cent-to-40 per cent.

March saw the company announce that it was looking at ways for the extension of its growth, including a float on a stock exchange, private equity investment, or a sale.

The company recruited former Tesco boss Sir Terry Leahy onto the board, to use his expertise in retail and there was also a trial of a Blackcircles fitting service at some Tesco superstores.

The Michelin deal opens up expertise as also a much wider distribution network, without limiting Blackcircles.com to the brand products of the parent company.

Jean-Dominique Senard, chief executive of the Michelin Group, commented: "Our strategy illustrates our ambition: to be ever more innovative, efficient and proactive for our customers by offering them products and services suited to individual needs, and by simplifying the entire purchase process, from choosing their tyres to having them fitted by professionals."

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