Within a month of announcing plans to roll out an app to take advantage of consumers’ growing interest in vehicle subscriptions among other online activities, LMP Automotive Holdings made another significant move to get deeper into the dealership world.
On Monday, the e-commerce and facilities-based platform for consumers who desire to buy, sell, subscribe for or finance used and new vehicles announced plans to acquire a 70% interest in New York’s largest franchise dealership group, Atlantic Automotive Group, as well as logistics and vehicle storage company, Atlantic Central Storage.
The proposed deal is valued at $608 million.
The move for the New York dealerships also came after LMP Automotive Holdings announced plans to acquire an 85% interest in five new-vehicle franchises and three pre-owned centers in West Virginia as well as a 100% interest in four new-vehicle franchises in Tennessee.
Should the deals come to fruition, the company portfolio would include 33 franchises. Here is a brand breakdown according to company news releases:
Lexus: 2
Toyota: 5
Honda: 3
Subaru: 1
Hyundai: 6
Genesis: 3
KIA: 3
Chevrolet: 4
GMC: 2
Cadillac: 2
Buick: 2
And the company seems to be far from finished as LMP said it plans on adding 30 to 40 dealerships in 2021.
“We are seeing a robust acquisition market as we continue to build our pipeline of prospective dealership acquisitions and intend on accelerating our acquisition strategy moving forward in our targeted regions, as well as recruiting adding additional management and promoting within our portfolio companies,” LMP chief financial officer Evan Bernstein said in one of those news releases.
On the fintech front, last month LMP also launched its interactive e-commerce website with similar functionality as its app that’s available in the Apple App and Google Play Stores.
The company said it is currently developing software logic and algorithms for the integration of F&I, service contracts and automated document management that LMP expects to increase margins in addition to gross and net profits per sale significantly. Management anticipates releasing these updates to its app and website in the fourth quarter of this year and first quarter of 2021.
LMP also intends to simultaneously integrate the vehicle inventory of its contracted acquisitions. LMP expects this combination will enhance its customer experience, lower SG&A per transaction. as well as significantly expand its lmpmotors.com online store.
“We see the immense opportunity that exists within our industry that we are exploiting through continued focused growth and the activation of our e-commerce sales, subscription and dealership acquisition strategy,” LMP chairman and chief executive officer Sam Tawfik said. “We are seeing a robust acquisition market as we continue to build our pipeline of prospective dealership acquisitions and intend on accelerating our acquisition strategy moving forward.
“Looking forward, we are as optimistic as ever and focused on our next-generation of innovation and growth as we roll-out e-commerce home delivery, site-to-store and ship-from-store delivery strategies for our customers and demonstrate the value of our e-commerce hybrid model at the growing list of auto dealerships we intend to acquire,” Tawfik continued.
“At LMP, we intend to demonstrate rapid, efficient and profitable expansion in this online-centric economy. LMP is focused on acquiring dealer groups to create concentrated clusters of dealerships to derive maximum SG&A efficiency while expanding consumer product and delivery optionality,” he added. “At the same time, we plan on maintaining each dealership’s local brand recognition and online presence while simultaneously aggregating the dealership’s new and used inventory on lmpmotors.com.
“By leveraging our access to acquired dealership inventories, we can create one of the largest and most diverse online stores, providing consumers multiple vehicle access and ownership options. We plan to grow revenues and earnings of dealerships that we acquire by adding e-commerce and subscription options for their customers as well as ‘tech’ enabling them. We believe this combined approach will produce continued revenue and earnings growth for us and our shareholders,” Tawfik went on to say.
Lithia Motors continued its busy second half of expansion Tuesday, announcing it has acquired Latham Ford in the Albany, N.Y., area.
This move marks the 12th store to be added to Lithia’s network in the last two months, along with several others announced earlier in the summer.
Lithia announced the purchase of Jim Cogill CJDR in Knoxville, Tenn., in late September. Three weeks earlier, Lithia purchased the remaining six stores in the John Eagle Dealerships family, having announced its purchase of four John Eagle stores on Aug. 4.
In late July, Lithia announced it had purchased BMW of San Francisco, which followed the addition of DCH Subaru of Thousand Oaks, Calif., in mid-July.
Earlier in the month, Lithia announced it acquired Smolich Chrysler Jeep Dodge Ram and Nissan dealerships in Bend, Ore.
As for the latest deal, Lithia anticipates Latham Ford will bring in annualized revenues of $55 million to the group.
All of the expansions to Lithia’s network in 2020 are expected to bring more than $1.75 billion in annualized revenues.
“We are pleased to add Latham Ford to the Lithia Family, further strengthening our ability to serve our communities in the Northeastern United States,” Lithia president and chief executive officer Bryan DeBoer said in a news release.
He added: “The growth of our physical network expands our ability to provide consumers with convenient and affordable new vehicle, used vehicle, service and parts solutions.
“Together, with our Driveway digital home channel, we are providing flexible and complete vehicle ownership solutions wherever, whenever and however consumers desire.”
Lithia funded the acquisition via free cash flow and existing on-balance sheet capacity.
More news continues to arrive on the M&A side of retail automotive, including some recent moves in two of the nation’s largest metropolitan areas.
Starting in the Midwest, Minneapolis-area retailer Walser Automotive Group announced Friday it has expanded its presence to the Chicagoland area with the purchase of Countryside, Ill., dealership Continental Nissan.
The acquisition closed Thursday and is the group’s second of the year. In May, Walser Automotive Group purchased Hello Auto Group, a three-store group in Santa Clarita, Calif.
“Continental Nissan and the Continental Automotive Group have a longstanding history in the greater Chicago area. Their commitment to serving their employees, customers, and the community reflect our values and the way that Walser does business,” Walser Automotive Group chief executive officer Andrew Walser said in a news release. “We are thrilled to carry on that legacy of success.”
Down South, ZT Motors announced Friday it has completed its purchase of the Ron Carter Autoland group in Alvin, Texas, which is in the Houston area.
ZT Motors is the automotive arm of ZT Corporate, a private equity firm based in Houston.
The three Ron Carter Autoland dealerships, which will keep their Ron Carter branding, are the first Texas stores in the ZT Motors portfolio.
ZT Motors now has eight stores in the portfolio, which also includes four dealerships in Fort Walton Beach, Fla., and one store in Atlanta.
“To say we’re excited to deliver the ZT Motors experience to our hometown of Houston would be an understatement,” ZT Corporate chairman and CEO Taseer Badar said in a news release.
“Our team has evaluated dealerships in the area for many years, and we’re confident that a highly respected and reputable brand like Ron Carter Autoland is the right opportunity to fuel our growth strategy,” Badar said. “We look forward to continued operational excellence and bringing our customer-first model to the Houston area.”
Less than a month after announcing the purchase of four stores within the John Eagle Dealerships family, Lithia Motors said Tuesday it has bought the group’s six remaining stores.
The dealerships in the latest purchase are all in Houston, while the stores in the prior transaction were in Dallas and Austin, Texas.
“The John Eagle acquisitions improve Lithia’s density in the South-Central region and expands our network with a dominant presence in four of the top five largest metropolitan markets in the United States,” Lithia president and chief executive officer Bryan DeBoer said in a news release.
“The growth of our physical network expands our ability to provide consumers convenient and affordable new vehicle, used vehicle, service and parts solutions and brand impressions,” DeBoer said. “Together, with our Driveway digital home channel, we are providing personal transportation solutions wherever, whenever and however consumers desire.”
This continues a busy summer of acquisitions, both for Lithia and the dealership buy-sell market at large.
Over the course of July 7 to Aug. 4, Lithia Motors made four announcements regarding dealership purchases it made throughout California, Texas and Oregon. The latest in that stretch was the purchase of four John Eagle stores (John Eagle Honda of Dallas, Honda Cars of Rockwall, Howdy Honda of Austin and John Eagle Sports City Toyota) in the Dallas and Austin markets.
The second half of the year has also included the closing of Asbury Automotive Group’s purchase of certain assets of Park Place Dealerships.
The Presidio Group, an investment bank specializing in retail automotive and related M&A transactions, was the exclusive M&A advisor to Park Place in the Asbury deal. It also was the exclusive M&A advisor to John Eagle on the sale of the six Houston stores to Lithia and in the sale of the four Dallas and Austin stores to Lithia last month.
“We are pleased that Lithia acquired our Houston area stores,” group CEO John Eagle said in a news release. “We know Lithia will provide excellent support to the employees and customers. The Presidio Group’s professionalism and confidentiality allowed this complex transaction to be completed smoothly.”
John Eagle president and chief operating officer Rene Isip added: “It was an honor to work with Lithia on this transaction. The Houston market will be an excellent addition to its growing Texas footprint.”
The stores in the latest transaction include Honda Cars of Katy, Honda of Clear Lake, John Eagle Acura, John Eagle Honda Houston, Clearlake Infiniti and Southwest Infiniti.
The deal was Presidio's fourth in Texas in the last two months.
“Working with John and Rene to structure this transaction was interesting given the size, brand concentration, and geographic breadth,” said Brodie Cobb, CEO of The Presidio Group, in a news release. “The business-friendly Texas market is super-hot right now.”
Presidio president George Karolis added: “Dealership profitability in Texas remains robust, making this an excellent time to invest in the Houston retail automotive market. Representing the John Eagle brand was an honor.”
For more on the dealership buy-sell market, including additional thoughts on Texas as a hot market, see Auto Remarketing's feature with Cobb here.
In other dealership M&A news from the second half, it was also announced in July that actor/producer Mark Wahlberg and his business partner, Jay Feldman, had purchased two dealerships in Columbus, Ohio from the Haydocy family: Haydocy Buick GMC and Haydocy Airstream & RV, which have been renamed Mark Wahlberg Buick GMC and Mark Wahlberg Airstream & RV.
About a month later, the pair purchased another store in town (Jack Maxton Chevrolet), which is renamed Mark Wahlberg Chevrolet of Worthington.
And Tuesday also brought news from CLA (CliftonLarsonAllen LLP), which said it aided Miller Auto in its sale to Gilleland Enterprises
To use store vernacular, Asbury Automotive Group’s acquisition of Park Place Dealerships finally rolled over the curb this week.
Asbury announced late Monday afternoon that it completed its deal to secure Park Place, adding approximately $1.7 billion in annual revenues.
Asbury president and chief executive officer David Hult elaborated about how the dealer group overcame pandemic-triggered challenges to complete the acquisition first announced back in December, nearly scrapped in March before being revitalized in July.
“Park Place remains one of the best operators of luxury stores in the industry. Their portfolio of stores comes with a strong base of loyal clients and long-term team members throughout the high growth Dallas/Fort Worth market,” Hult said.
“We are thankful to both the Asbury and Park Place employees who have worked tirelessly over the last few weeks to complete this transaction,” he continued. “The talent in both organizations and the resilience of the dealer model have put us in a position to become a stronger and more diversified company. I am pleased to welcome all our new teammates at Park Place.”
Before the development, Park Place owned and operated what Asbury described as a portfolio of high volume, award-winning luxury dealerships with premier real estate. Four stores are ranked among the Top 10 stores in volume in the country amongst their franchise: Mercedes-Benz, Lexus, Porsche and the Jaguar/Land Rover.
In addition, the other Lexus store and the Volvo store are ranked in the Top 20 stores in volume nationally, according to Asbury.
"The luxury segment has historically delivered strong and stable margins that are significantly above those achieved by mid-line import and domestic brands,” Asbury said in a news release. “Luxury stores also tend to be more resilient in economic downturns, and have higher and more stable margins, fewer dealers nationwide and a higher portion of gross profit from parts and service.”
The dealer group also highlighted the transaction will increase Asbury’s geographic mix to 28% of revenue derived from the Texas market and will further diversify the company’s overall portfolio from 36% to approximately 49% of revenue derived from luxury brands.
Presidio was the exclusive advisor to Park Place on the sale.
J.D. Power’s analytical horsepower is about to get much stronger.
Late Thursday afternoon, TrueCar announced that it has entered into an agreement with J.D. Power to sell its ALG subsidiary for $135 million. According to TrueCar’s news release, the total consideration includes an upfront cash payment of $112.5 million at closing and total deferred payments of up to $22.5 million based on certain financial results.
The company said the transaction was unanimously approved by TrueCar’s board of directors and is expected to close by the end of this year. The company also said the closing is subject to customary closing conditions as well as regulatory review and approval.
ALG is an industry authority on automotive residual value projections in both the United States and Canada, and the acquisition is expected to augment offerings from the data & analytics division of J.D. Power.
“We believe ALG will bring complementary strengths and value to J.D. Power and its clients,” J.D. Power president and chief executive officer Dave Habiger said in its own news release. “For more than 50 years, ALG has been a trusted data provider to the automotive industry delivering accurate and reliable residual value forecasts.
“Adding that component to our extensive data assets, valuation expertise and analytic tools will enable us to provide even more value to our clients. We are excited to welcome the ALG team to J.D. Power,” Habinger continued.
The companies emphasized that residual values are the foundation of vehicle leasing and are used across multiple segments of the automotive industry. Almost one-third of new vehicles sold each year are leased, typically for a three-year term, according to J.D. Power, which pointed out that at any point in time the value of vehicles in outstanding lease portfolios is estimated at $500 billion.
The companies reiterated that accurately predicting the value of vehicles at the end of the lease term is an essential activity for vehicle manufacturers and finance companies.
J.D. Power acknowledged countless variables affect the actual residual value of a vehicle over a multi-year lease term. Examples include mileage, quality/reliability, options and feature sets, weather and the macroeconomic environment.
Since these factors need to be taken into account in order to accurately forecast residual values, the company said. The more granularity and greater the understanding of the impact of each variable, the better equipped manufacturers and finance companies are able to maximize profitability.
Executives contend the combination of J.D. Power’s capabilities and data with ALG’s deep experience in residual values will allow for even more accurate end-of-lease forecasting capabilities.
”Today’s announcement is a tremendous outcome both in terms of the value delivered to our shareholders and the potential ALG will have with its new owner,” said Mike Darrow, president and chief executive officer of TrueCar. “After careful consideration of a variety of options and potential partners, it became clear that a sale of ALG to J.D. Power, with its breadth of complementary services, strong automotive industry expertise and trusted reputation, represents the best path forward for ALG’s clients.
“J.D. Power’s unwavering dedication to its clients and the remarkable level of trust it has built among consumers and the auto industry bodes well for the future of ALG,” Darrow went on to say.
While the acquisition adds to J.D. Power’s knowledge portfolio, TrueCar also touched on what the deal is intended to do for its operation.
TrueCar chief financial officer Noel Watson added in a news release from that company, “The successful completion of this transaction represents yet another milestone in our ongoing transformation. We continue to believe that an unwavering focus on our core business will drive a balance of sustainable growth and profitability that maximizes long-term shareholder value.”
TrueCar also announced in its release that its board of directors has authorized a share repurchase program of up to $75 million, with the intent to begin repurchasing shares in the near-term.
The company said intends to use available cash as well as the proceeds from the ALG divestiture to support this repurchase program, fortify its balance sheet and maintain strategic flexibility.
Seems like a summer of sequels for dealership acquisitions.
While blockbusters aren’t driving folks to theaters these days, movie star Mark Wahlberg continues to add to the coffers of a different line in his business portfolio.
Less than a month after it was announced the actor/producer and his business partner, Jay Feldman, had purchased two dealerships in Columbus, Ohio, the pair purchased another store in town: Jack Maxton Chevrolet.
The store is being renamed Mark Wahlberg Chevrolet of Worthington.
Wahlberg and Feldman now have four stores in Columbus. Others include Mark Wahlberg Buick GMC and Mark Wahlberg Airstream & RV (the two purchases from last month) and Mark Wahlberg Chevrolet, which was their first store in 2018.
“The people of Columbus have been good to us,” Wahlberg said in a news release. “This latest acquisition just strengthens our roots and deepens our bond with the market.”
Feldman added, “Having four dealerships in Columbus gives us the opportunity to provide consumers with a consistent sales and service experience.
“The Mark Wahlberg imprint on four locations enables us to leverage the Wahlberg advantage of providing brand choices, offering huge selection at the lowest prices and delivering great customer service,” he said.
Jeff Mauk, who previously owned the dealership, said: “The Maxton name has been on that Chevy dealership for 90 years. I know the current and future customers are in good hands with Mark and Jay at the helm.”
Further West, Lithia Motors made it a Texas-sized sequel with the purchase of four John Eagle Dealerships stores in Dallas and Austin: John Eagle Honda of Dallas, Honda Cars of Rockwall, Howdy Honda of Austin and John Eagle Sports City Toyota.
Just last week, Lithia announced it had purchased BMW of San Francisco, which followed the addition of DCH Subaru of Thousand Oaks, Calif. in mid-July.
Earlier in the month, Lithia announced it acquired Smolich Chrysler Jeep Dodge Ram and Nissan dealerships in Bend, Ore.
“We’re delighted to announce our network expansion in two of the largest markets in our logistically key South-Central region,” Lithia president and chief executive officer Bryan DeBoer said of the Texas additions in a news release Tuesday.
“We’re excited to welcome these high-performing teams to the Lithia family. Their reputation in their communities and extraordinary volume reflect a commitment to an exceptional customer experience,” DeBoer said.
The four stores are expected to add $500 million in annualized revenues. Lithia financed the purchase through free cash flows and existing on-balance sheet capacity.
“The acceleration of our plan to increase the reach and density of our network to more conveniently serve our customers is well underway,” DeBoer said. “Together, with our Driveway ecommerce digital home channel, we are providing personal transportation solutions wherever, whenever and however consumers desire.”
This week, the footprint of the Sewell Automotive Companies in the Lone Star State became even larger thanks to involvement by the Presidio Group.
According to a news release from the investment bank specializing in retail automotive and related M&A transactions, Park Place Dealerships completed the sale of Jaguar North Austin and Land Rover North Austin in Austin, Texas to Sewell Automotive.
“We admire the Park Place organization and we are proud to share many of the same core values including our care for our customers, employees and communities,” Sewell chairman and chief executive officer Carl Sewell said.
“We have been serving Texans for over 100 years and we are grateful for this incredible opportunity to now serve Austin and to add the Jaguar and Land Rover brands to our portfolio of outstanding franchise partners,” Sewell continued.
This transaction is the second one involving Park Place this month as the organization revised terms for a move involving Asbury Autmotive Group. Ken Schnitzer, chairman of Park Place Dealerships, described how this deal with Sewell came together.
“The Sewell family is known for operating its dealerships at the highest level. I am confident they will continue to care for the customers and employees of our Austin JLR business,” Schnitzer said.
“The Presidio Group’s expertise was essential to helping us find the best buyer and execute this transaction in the middle of the major disruption caused by COVID-19,” he added.
Leadership from the Presidio Group added these perspectives.
Founder and CEO Brodie Cobb said, “We have worked with Ken Schnitzer for many years and we're honored to work with him on this transaction.
President George Karolis added, “Park Place Dealerships and Sewell Automotive Companies are both iconic family-owned Texas dealership groups renowned for their customer service."
The Presidio Group provided exclusive M&A advisory services to Park Place through its wholly owned investment bank, Presidio Merchant Partners.
For the past 40 years, the Jerry Seiner Dealerships have operated in Utah. This week, the dealer group made its entrance into Arizona.
According to a news release distributed on Tuesday, the Jerry Seiner organization has purchased Henry Brown Chevrolet and Henry Brown Chrysler Dodge Jeep Ram in Casa Grande, Ariz. The group said these dealerships will be rebranded to Jerry Seiner Chevrolet and Jerry Seiner Chrysler Dodge Jeep Ram.
“The Jerry Seiner Dealerships have been providing quality transportation solutions and service to Utahns for 40 years,” said Chris Hemmersmeier, owner and chief executive officer of the Jerry Seiner Dealerships. “We are thrilled to introduce the Seiner brand and our incredible level of service to the residents and businesses of the Casa Grande and greater Phoenix areas.”
Both dealerships will be led by Tom Hemmersmeier as general manager. He will be relocating with his family to Casa Grande.
“I am excited to join the teams in Casa Grande,” said Tom Hemmersmeier, who is the current director of sales operations, training and used vehicles for the Seiner organization. “We have a great team in Casa Grande and I am looking forward to helping them continue to serve this community, grow the business and show what the Seiner difference is all about here in Arizona.”
The Seiner Dealerships currently represent the Chevrolet, Cadillac, Buick, GMC, Kia, Isuzu and Mazda brands in Utah.
“In our 40-year history, we have changed and grown our organization by seizing opportunities before us and creating more along the way,” Chris Hemmersmeier said. “Over the past several years we have been creating our future; from purchasing and consolidating Cutrubus Cadillac in Layton, Utah, expanding our wholesale parts efforts in the Mountain West, and launching a new Kia showroom in Salt Lake City.
“This transaction will allow us to strategically focus on future business opportunities that are aligned with our values and strengths as a company,” Hemmersmeier went on to say.
Vehicle ecommerce platform Shift plans on going public in the third quarter through a merger agreement announced Monday with special purpose acquisition company Insurance Acquisition Corp.
The latter is publicly traded on NASDAQ.
The merger is projected to close in Q3 and once it does, IAS plans to change its name to Shift Technologies, Inc. The combined company will remain on NASDAQ and Shift’s management will continue to operate the combined company.
Shift would become the third player in its space to go public. Vroom launched its initial public offering earlier this month, after announcing its IPO plans in May. Carvana went public in 2017.
“Shift's mission is to make car purchase and ownership simple. Merging with Insurance Acquisition Corp. is the next step in our evolution and will enhance our ability to scale our operations as we continue to deliver one of the industry's broadest selections of used cars via our powerful technology platform,” Shift co-chief executive officer George Arison said in a news release.
“We look forward to partnering in a transaction that provides an efficient path for a successful transformation to a public company,” Arison said.
Shift co-CEO Toby Russell added: “Our high net promoter score demonstrates our success in delivering a simple, satisfying car buying experience for consumers, and our strong market penetration in our core markets demonstrates our ability to effectively scale the business.
“We operate in a massive market and we believe that there is a significant opportunity to continue to rapidly grow our business,” Russell said. “We are actively pursuing our growth initiatives as we execute on our vision.”
The aggregate consideration in the merger is approximately $380 million in Insurance Acquisition Corp. Class A common stock. An additional 6 million shares would be earned with the combined entity hitting specific price targets.
As part of the merger, institutional investors like Fidelity Management & Research Company, LLC, and ArrowMark Partners are committed to a private purchase of $185 million in IAC Class A common stock. That would close at the same time as the companies merge.
IAC intends on registering the private shares shortly after the merger closes. It is planned for the combined company to retain cash up to $300 million after the deal for working capital and fund growth.
In the news release, IAC board chairman Daniel Cohen said: “We are excited to partner with Shift and its world-class management team as it leverages its technology platform to disrupt the $840+ billion used car market.
“With its tremendous, ongoing success in its core markets, we believe that this merger and its accompanying capital infusion will enable Shift to expand its product offerings and execute on its growth strategies."
