CARY, N.C. –
Asbury Automotive Group’s deal to purchase Park Place Dealerships is back on, with revised terms from the previously announced agreement in December, the retailer announced Monday.
More details and an update on that transaction can be found below.
In other dealer group M&A news, Lithia Motors said Tuesday it has acquired Smolich Chrysler Jeep Dodge Ram and Nissan dealerships in Bend, Ore.
Lithia, which is headquartered some three hours away in Medford, Ore., said the acquired stores are likely to pull in steady state annualized revenues of $100 million.
“As the automotive retail environment continues to show significant sequential improvements, we have restarted acquisitions, completing the first two pending acquisitions,” Lithia president and chief executive officer Bryan DeBoer said in a news release.
“Growth of our network is the foundation to the fulfillment of our current and future brand promises, regional logistics plan and ability to provide competitive customer offerings through all six business lines.”
A recap of operational results from Asbury and Lithia can be found in this story.
Asbury’s Park Place purchase
In Monday’s news release, Asbury said it signed a definitive agreement to buy certain assets of Park Place. The price was $685 million of goodwill and roughly $50 million for parts, fixed assets and leaseholds, outside of vehicle inventory.
The deal was initially announced in December. At the time, Asbury announced it had come to an agreement to buy certain assets of Park Place for $1 billion in cash, excluding vehicle inventory.
Amid the uncertainty around COVID-19, Asbury “had to step away” from the deal in March, but the rebound in recent months has allowed the group to “proceed with a more refined deal under more flexible and favorable terms,” Asbury president and CEO David Hult said in Monday’s news release.
“We are pleased our business model and performance allowed us to navigate the current environment and re-engage on a highly strategic acquisition that will make us an even stronger company. We have seen our new and used volume sequentially improve each week in May and June with higher profit per vehicle. We have also seen our parts and service business improve in June as the economy gradually opens-up,” Hult said.
“Strong May and June performance, along with cost restructuring efforts, have driven higher profitability and cash flow, giving us conviction to move forward with a revised Park Place acquisition,” Hult said. “In March, we had to step away from the transaction due to lack of visibility around COVID-19, but after seeing the rebound off the April low, we can proceed with a more refined deal under more flexible and favorable terms.”
As far as the operating assets Asbury is acquiring from Park Place, those include 12 new-car franchises in the Dallas-Fort Worth market, the Park Place auto auction and two collision centers.
The retailer expects the transaction, which is subject to customary closing conditions, to close in the third quarter.
“Park Place is highly regarded as one of the best and most efficient operators of luxury stores in the industry. Their portfolio of stores comes with a strong base of loyal clients and long-tenured team members throughout the high growth Dallas/Fort Worth market,” Hult said. “This acquisition will enhance our total portfolio and add approximately $1.7 billion in expected annualized revenues. We are thankful to all of our employees who have worked so hard over the last few months to manage through this pandemic.
“The talent in our organization and the resilience of the dealer model have put us in a position to acquire Park Place and become a more diversified company.”