Group 1 Automotive sees its success in Houston and Boston being possible in Atlanta because of its “cluster strategy.”

The dealer group can use that approach with a footprint of 15 stores in the Georgia metropolis, as Group 1 announced on Thursday that it has signed a definitive agreement to acquire the dealership assets and real estate of Hennessy Automobile Companies.

This transaction — coupled with recent acquisitions of Stone Mountain Honda and Stone Mountain Toyota — will expand Group 1’s Atlanta presence from three to 15 dealerships, making the city the company’s second-largest market based on revenue and its ninth market in the U.S. with five or more stores.

According to a news release, the Hennessy acquisition is valued at approximately $1.3 billion inclusive of blue sky, real estate and operating assets. Group 1 said it plans to finance the transaction with new debt, backstopped by a bridge commitment.

The dealer group added that the transaction is expected to close by the end of the year and is subject to regulatory approvals, OEM approvals and customary closing conditions.

“Our cluster strategy has long focused on premium brands in attractive growth markets with high-revenue rooftops where we can leverage scale and expand margins,” said Daryl Kenningham, Group 1 president and CEO. “Building on a strategy we have executed successfully across our largest markets, including Houston and Boston, this acquisition significantly expands our presence in the growing Atlanta market and creates new opportunities to enhance operational efficiency and deliver attractive, long-term returns.

“The Hennessy family has a tremendous reputation in Atlanta. We feel privileged to purchase this world class business. We thank the Hennessy family for trusting Group 1 with the transaction.,” Kenningham continued in the news release.

The transaction includes 10 dealerships, a brand portfolio that contains key luxury and import brands, including Lexus, Jaguar/Land Rover and Porsche, and facilities containing 500 service bays staffed by approximately 280 technicians.

Group 1 said the move is expected to generate approximately $1.7 billion in annualized revenue and be immediately accretive to the company’s earnings per share upon closing.

The dealer group highlighted Atlanta is a robust automotive market with strong fundamentals.

The city is the sixth largest MSA, according to U.S. Census Bureau, and seventh largest DMA in the U.S., according to Nielsen, as well as the fastest-growing MSA and largest luxury vehicle market in the Southeast, with 21% luxury vehicle market share, according to Urban Science.

The city’s real GDP growth outpaced the national average growth rate by more than 50% from 2014 to 2023, according to data from the Federal Reserve, and the average household income within Hennessy’s markets specifically is approximately $150,000 per year, according to the U.S. Census Bureau.

J.P. Morgan Securities is acting as exclusive financial advisor, and Hill Ward Henderson and Vinson & Elkins are serving as legal advisors to Group 1. Kerrigan Advisors is acting as transaction advisor, and Holland and Knight is acting as legal advisor to Hennessy.

“For 62 years, our family company has been a cornerstone of the Atlanta automotive community, excelling in vehicle sales, servicing and leasing,” Peter Hennessy said in the news release from Group 1.

“Under Group 1’s stewardship, I know this strong legacy and deep commitment to Atlanta will continue. Group 1 shares our customer-focused philosophy, which will remain the foundation as they move our dealerships into the future,” Hennessy went on to say.