Group 1 Reveals Acquisitions & New Board Member; Assesses Hail Damage in New Orleans

With new dealership acquisitions in the U.K. as well as purchase of one of Brazil’s largest auto retailers, a new board member appointment, and a Douthern hail storm that affected four of its New Orleans dealerships, news was streaming from Group 1 Automotive last week.  Unfortunately, the Feb. 24 hail storm was not the first natural disaster the dealership group has had to deal with Down South in the past six months.

After the company suffered dealership damage from Hurricane Isaac this past fall, now, it announced it is assessing damage at four of its New Orleans dealerships in the aftermath of a Feb. 24 hail storm.

“Preliminary assessments indicate there is damage to some of the facilities and most of the new- and used-vehicle inventory located at the four stores,” Group 1 shared.

The company currently estimates it will incur pretax charges related to the deductibles in the range of $1.1 million to $1.4 million, or approximately $0.03 per diluted common share, in the first quarter.

But the affected dealerships are still open for business with full capacity in the parts, service and collision areas, but with limited sales operations, the company said.

That said, “While the company is working with its manufacturer partners to replace the damaged inventory it expects sales to be adversely impacted until inventories are fully replenished by late May,” officials reported.

Group 1's four New Orleans dealerships are composed of five franchises, including Ford, Buick, GMC, Toyota and Hyundai.

The four dealerships represented 2.5 percent of Group 1's total new-vehicle unit sales in 2012.

In other news from the company, Group 1 revealed last week it has expanded its footprint in the United Kingdom with the acquisition of four Ford dealerships southwest of London.

The stores are expected to  generate approximately $177 million in estimated annual revenues.

The dealerships will trade under the “think Ford” brand name and are located in the towns of Farnborough, Guildford, Wokingham and Bracknell, the company shared.

On top of these new acquisitions, Group 1 also has BMW/MINI dealerships located in Farnborough and other adjacent market areas south and southwest of London.

“We are delighted to add Ford to our brand offerings in England with this acquisition of four dealerships in a growing area outside of London,” said Earl Hesterberg, Group 1's president and chief executive officer. “We are also very pleased to expand our relationship with Ford Motor Co. internationally.”

Lastly, the company also announced it has closed the previously announced acquisition of UAB Motors Participacoes S.A., one of Brazil's largest automotive retailers.

The company acquired 100 percent of the outstanding shares and interest in 18 dealerships, for approximately $47.4 million cash, 1.45 million shares of Group 1 common stock and the assumption of approximately $62 million of net non-floorplan debt, the company reported.

The 18 dealerships are broken down as follows: two Toyota, four Nissan, four BMW, two MINI, three Renault, three Peugeot, two Land Rover and two Jaguar.

The dealerships are expected to generate approximately $650 million in total estimated annual revenues and be approximately $0.03 to $0.05 accretive to earnings per diluted common share in 2013 excluding any associated deal costs.

With this acquisition also comes a new board member for the dealership group.

The Brazilian business will continue to be operated by the current management team, with UAB's chairman, Lincoln da Cunha Pereira Filho, reporting directly to Hesterberg.

And Pereira has also been appointed to Group 1's board of directors, expanding its membership to eight.

“In addition to his extensive automotive retailing and manufacturer relations experience, Lincoln brings a deep knowledge of the Brazilian finance, trade and legal sectors, as well as a great understanding of Brazilian business in general,” said Hesterberg.

“His unique expertise will benefit the Group 1 leadership team as we expand into this new international market,” he added.

Sarah Rubenoff can be reached at srubenoff@autoremarketing.com. Continue the conversation with Auto Remarketing on both LinkedIn and Twitter.