As first reported by The Banks Report, Holman Automotive announced on Tuesday that it will acquire Kuni Automotive in a deal that executive say creates one of the largest privately owned dealer networks in the country.
Holman added the deal also ensures a long future for a major charitable foundation.
The dealer group highlighted the acquisition, expected to be finalized this summer, will create a bi-coastal network with 33 dealerships and more than $3 billion in overall annual revenue, doubling Holman Automotive’s retail holdings.
Holman currently has dealerships in New Jersey, Pennsylvania and Florida. Kuni Automotive, with dealerships in Washington, Oregon, California, Colorado and Kansas, will maintain its brand name and will be known as Kuni Automotive, a Holman Enterprise.
Executives added that the terms of the deal will not be disclosed.
As a result of this deal, the majority shareholder in Kuni Automotive — the Wayne D. Kuni and Joan E. Kuni Foundation — a charitable foundation that has supported cancer research and worked to enhance the lives of developmentally disabled adults since 2005, will be able to fund its work well into the future.
Additionally, the foundation expects to be able to broaden the scope and geography of its charitable outreach.
“Our two companies share a deep culture of charity and community service," said Melinda Holman, chairman of the board of Holman, who will join the board of the Kuni Foundation.
“Knowing that more than half of the proceeds will go to the Kuni Foundation and serve people in need for decades to come is a wonderful byproduct of this transaction,” Holman continued.
The dealer groups said that it was vital to Kuni Automotive chief executive officer Greg Goodwin to find a buyer who not only shares his company's values, but would also create a company that is not just bigger, but better.
“We are creating a company that is greater than the sum of its parts," said Goodwin, who will remain with the company in a leadership position.
“It's easy to get lost in the ‘bigness’ of this transaction, but ‘big’ doesn't serve a purpose if it doesn't improve the company,” Goodwin added.
Holman executive vice president and chief strategy officer William Cariss has been responsible for overseeing the Holman-Kuni transaction from start to finish. Once the transaction is complete, Cariss will be responsible for identifying future investment opportunities across Holman’s business segments.
“As we consider future opportunities, we hope to find companies, like we did with Kuni, that have similar values and work ethics that blend well with the Holman culture,” Cariss said.
Holman CEO Carl Ortell pointed out the expansion comes at a time of consolidation and innovation in the automotive industry.
“Our acquisition of Kuni comes at a time when these two organizations have never been stronger. We are well-positioned to remain a leader in the auto industry as it continues to evolve. What's more, we are well-placed for future growth in all of Holman's business segments,” Ortell said.
“We’re creating a company with a global footprint that will allow our people to explore new career opportunities within the larger organization,” he went on to say.
Holman plans to remain a privately owned company in anticipation it “continues to grow and flourish.”
Melinda Holman added, “Plan A is to remain a family-owned company for generations to come. And there is no Plan B.”
Mark O’Neil, the newly minted chief operating officer of Cox Automotive, is staying put in Virginia, he tells Auto Remarketing during an on-site interview at the NADA Convention & Expo this past weekend.
He has no plans to move to Atlanta, where Cox Automotive and its parent (Cox Enterprises) are headquartered.
That’s no slight on the city; by all accounts, the company certainly plays an active role in the city’s economy and community.
It’s just a new way of thinking at a company, and within an automotive industry, that’s increasingly global.
While much of Cox Automotive’s leadership certainly still resides in Georgia’s capital, many of its top-line executives are situated throughout the country.
If you think about O’Neil’s direct reports, some are located in Atlanta, yes. But many others are based in places like Carmel, Ind.; Austin, Texas; and Burlington, Vt.
And just as those cities represent various corners and alcoves on the U.S. map, much of Cox Automotive’s business model resembles a cross-section of the retail and wholesale auto industry at large.
Auctions, classifieds listings, vehicle research/pricing guide, inventory management, websites, software, transportation, and so on.
These services, along with senior leadership located throughout the country, reflect Cox Automotive's rapid acquisition expansion in recent years that culminated in perhaps the crown jewel of all the purchases: Dealertrack Technologies, where O’Neil had been chief executive officer.
But it also reflects a changing mindset towards senior leadership and Atlanta: they're “connected, not relocated,” as O’Neil put it.
“I’ve had long discussions with the senior leadership of Cox Enterprises about the importance of building a global company; that if we are going to be a global company, we cannot be Atlanta-centric. Because the world does not revolve around Atlanta,” he said.
Cox Automotive is introducing a new approach, one that will be a “multi-year effort,” where the line of thinking is, “it’s important to be connected to Atlanta; it’s not necessarily important to live in Atlanta,” O’Neil said.
“It’s not necessarily important to think about your job being there, whether it’s my job or (chief product officer Rick Gibbs’) new job,” he said.
“You can be almost anywhere in today’s environment. But wherever you are, you must be connected to all of those who you work with,” O’Neil said. “And that can be a virtual connection; it doesn’t have to be physical.
“And the ideal is probably a hybrid, right? We’re going to do so many meetings a year in person; we’re going to do so many events in person; and we’re going to do so many virtually,” he said.
“And, oh by the way, in between, we’re all going to be at clients and be distributed around doing other things, where we’ll also connect,” O’Neil said. “So, connected, not relocated. It’s also much more efficient for the company.”
Editor's Note: This is the first in a series of stories about Cox Automotive's leadership stemming from Auto Remarketing's interviews with O'Neil and Cox Automotive president Sandy Schwartz at the NADA Convention.
Late on Friday afternoon as much of the industry mingled through the opening day of the NADA Convention & Expo in Las Vegas, KAR Auction Services announced that subsidiary, ADESA, successfully completed the acquisition of eight auctions owned by the Brasher family along with its floor-plan financing business.
In addition to the formal completion of the transaction, the company also shared how the eight locations will be renamed. The rundown includes:
—ADESA Salt Lake
—ADESA Brasher’s (Sacramento)
—ADESA Portland
—ADESA Boise
—ADESA San Jose
—ADESA Northwest (Eugene)
—ADESA Reno
—ADESA Fresno
The company mentioned Brasher’s key corporate and local auction personnel will maintain leadership roles across the Brasher auctions.
“Finalizing the acquisition of these eight auction sites is great for our customers and our employees,” KAR chairman of the board and chief executive officer Jim Hallett said. “It allows us to provide an even wider assortment of services to dealers at these new locations and leverage the strength of the entire KAR group of companies.
“The Brasher family has a long history in our industry as a premier auto auction and is a great fit with our organization,” Hallett continued.
The addition of these auctions now gives ADESA 74 whole car auction locations in the United States, Canada and Mexico.
“I look forward to working with the Brasher’s team to serve all of our customers’ vehicle remarketing needs — in the lanes, online and financing,” said Stéphane St-Hilaire, CEO and president of ADESA. “The Brashers share our strong customer focus and together we will enhance the auction experience with our expanded service offerings.”
Brasher’s president John Brasher added, “On behalf of the Brasher family and Brasher’s Auto Auctions more than 1,300 employees, we are excited to officially become part of the KAR team.”
In advance of the opening of the NADA Convention & Expo, eBay announced it has acquired Cargigi — a provider of online advertising and marketing services — in a move designed to leverage Cargigi’s technology to help push dealers’ inventory onto eBay.com.
According to a blog entry eBay made on Wednesday, financial terms were not disclosed.
Executives indicated Cargigi will replace eBay’s Dealer Center, providing sellers with the tools needed to streamline and enhance the vehicle selling process. They mentioned the addition of Cargigi will also enable eBay to build out its structured data capabilities for the vehicles industry.
Jay Hanson, vice president of merchandising of hard goods at eBay, said, “eBay continues to enable commerce through technology.
“With Cargigi’s state-of-the-art technology, our eBay Motors dealers will be able to easily grow and manage their business, and, importantly, create the best shopping experience for buyers,” Hanson continued.
Cargigi was founded in in 2009 by Tony Hoang. Prior to Cargigi, Hoang founded CDMdata, an automotive data collection and marketing company that was acquired by Kelley Blue Book.
Hoang and his team of more than 30 employees, including engineers and designers, will join the eBay Motors business unit.
“Cargigi was built with passion and a spirit of innovation that has helped power its success over the years. After making a significant impact on the automotive sector early on, Cargigi quickly became one of the top classified marketing service providers for thousands of dealerships nationwide. As Cargigi has continued to scale, it has remained singularly focused on innovating and creating great products,” Hoang said.
“With the company’s strong automotive DNA, Cargigi has evolved into a vertical support platform for major automotive classified websites globally,” he continued. “As an integral part of the eBay Motors vehicles business, Cargigi will bring greater value to its U.S. sellers and enhance the experience for eBay vehicles sellers.”
Reynolds and Reynolds announced Tuesday that it has acquired ReverseRisk, a Web-based analytics reporting platform for automotive dealers.
ReverseRisk will be added as part of the Reynolds Retail Management System portfolio of solutions and can be used by any dealership regardless of their DMS.
According to the company, the platform delivers business information and analytics to dealers, aiming to help dealers assess their dealership’s performance and operating results.
Robert Burnett, Reynolds’ senior vice president for business development and acquisitions, explained the thought process behind the acquisition.
“Dealers I speak with consistently point out that one of the biggest challenges they face is how to identify the right information at the right time to continually optimize their dealership’s performance,” Burnett said. “That’s what ReverseRisk delivers. It’s intelligent, timely business information and analytics at a dealer’s fingertips — smarter, faster, better — that can lead to improved operating results and dealership performance.”
Of course one key trait of a Web-based platform is that it’s available anywhere there’s an internet connection, and the company says any device with internet access can use ReverseRisk. The platform allows information to be shared simply with dealer management, helping them to achieve their objectives from just about anywhere.
Reynolds believes that ReverseRisk is a prime candidate for a standalone reporting platform and “eliminates the need for dealership managers to use multiple reporting systems in order to gain a complete picture of their operations.”
“In the same way that Apple’s technology ecosystem is easy to use but incredibly sophisticated, ReverseRisk is an easy-to-use reporting platform with the sophistication behind the scenes,” Burnett said. “For single- and multi-point dealerships, ReverseRisk delivers complete control of their data and provides usable, relevant information for ongoing operating improvements.”
David Spisak, president and co-founder of ReverseRisk, says he is excited for company to join Reynolds and Reynolds.
“Being part of a company with the proven innovation and product development prowess of Reynolds will be a tremendous advantage for ReverseRisk and for our customers,” Spisak said. “We look forward to continuing to serve and support our current ReverseRisk customers and to adding new customers working with Reynolds.”
As part of a separate, prior partnership, ReverseRisk will continue to also be resold by NCM Associates under the NCM axcessa name to its automotive clients.
It’s funny how things play out sometimes.
When Jim Hallett attended his first National Auto Auction Association convention, he took a shuttle from the airport to the hotel. Riding on that same bus was Larry Brasher, whose father Frank Brasher started what the family has developed into a multi-auction enterprise.
A few handfuls of years and conventions gone by, Hallett is now chief executive officer and chairman of the board at KAR Auction Services, whose ADESA business unit has signed a definitive agreement to purchase all eight of the Brasher’s auction locations.
That deal, announced Wednesday afternoon, expands ADESA’s footprint in the West, giving the auction group locations in three new states, those being Idaho, Oregon and Utah.
Among other areas of KAR’s business, the move was a popular topic during KAR’s quarterly earnings call on Thursday.
During the Q&A portion of the call, Bob Labrick of CJS Securities asked about how long KAR had been speaking with Brasher’s.
“Well, I can tell you, Bob, I’ve been speaking to Brasher’s for 20 years,” Hallet said, before briefly sharing his NAAA bus ride experience and noting the longstanding relationships the company has had with independent auctions like Brasher's and the initiatives on which they've worked together.
And now, the latest step in that relationship with Brasher's should not only give ADESA an expanded Western presence, but help it make “inroads” for its buyer base and additional opportunities for other companies in the KAR family.
“We’ve been telling you for some time now that we’re focused on expanding our buyer base,” Hallett said. “And this makes great inroads to doing that for ADESA, with this acquisition. We’re also very, very focused on protecting and growing our online offerings, especially our private-label sites — which, you know, is an area that we dominate … and we expect to continue to have those private labels going forward.”
Hallett also emphasized this facilitates AFC establishing a presence in these markets, and for KAR to bring its ancillary services, as well. Like, for instance, the company’s logistics, inspection and dent removal services that it can integrate into the acquired locations.
“And as I speak of this, I haven’t even spoken to you about possible synergies that will take place once we’re fully integrated,” Hallett said.
“You can do the math. You’ve seen what the purchase price was. You’ve seen what the EBITDA on annual basis was, and calculated the multiple. We’ve believe that not only is this deal accretive, we believe it’s going to be a very attractive deal now and post-synergy, and a great addition for the ADESA business.”
Hallett said Brasher’s currently sells 190,000 vehicles per year, and that mix of dealer/commercial consignment is similar to ADESA. He also noted that “there isn’t really a major gap in either revenue per car or the number of online vehicles sold” between Brasher’s and ADESA.
In other words, it’s “nothing we don’t think we can’t bring up to our levels in a very short time period,” Hallett said.
And KAR isn’t done making acquisitions this year, Hallett said. Several opportunities are on deck and “discussions are well underway,” he said, noting that they primarily center on the whole-car business.
Later in the call, Hallett, discussing acquisitions further, said: “We’ve always maintained that there’s probably five to 10 really what I would call ‘plum’ opportunities – although we may have captured the biggest plum here.
“But there’s really five to 10 opportunities out there that if they became available and we could get these done at the multiples that we’ve maintained discipline around, then we’d be very much interested in acquiring those in the market that I’m talking about.”
On Wednesday, the same day ADESA’s agreement to purchase its eight auctions was announced, Brasher’s posted a statement to its website that explained the decision to sell its locations. Additionally, Brasher's provided some detail on the impacts going forward.
The company made the decision to sell its eight auctions “after much serious consideration and evaluation of our history, current state of the auctions, and the future of the auctions and our family,” it said.
The statement goes on to acknowledge the many questions that folks may have, not the least of which is why Brasher’s chose to sell its locations.
“We believe our auctions are the best in the industry. We have the best employees, the best customers, and the best service. We are proud of the culture of excellence that has extended three generations over 67 years,” the company said.
“In recent months, the current 10 owners of Brasher’s have been considering how to transition this business to the fourth generation,” it continued. “We were beginning to discuss the possibility of several difficult options, including the possibility of breaking up our family of auctions amongst the different family members. All of these options seemed very difficult and painful.
“During this process, we were approached by ADESA about purchasing our auctions. As discussions ensued, it became clear that this was the best way forward for our family and for the future of the auctions.”
In the statement, Brasher’s also aimed to assuage some concerns that may come up. They began by clarifying that the locations will continued to be managed by the Brasher family, and further emphasize that “massive changes” should not be expected.
“We are young, with lots of life left in us, and this business is part of us. We will continue to work side by side with you and make our auctions as great as possible,” Brasher’s said.
“Secondly, please know that we have a terrific culture and a great reputation in the industry. ADESA knows this, and they want to preserve that culture and reputation,” the statement reads. “There are not massive changes coming. We will continue to use our computer system for the foreseeable future, and continue to provide all the same services to our dealers that we do now.
“Changes will come, and we will be here to go through all of them with you. We will be here to answer all the questions we can. Please call us, email us, or come in and talk to us.”
The full letter can be found at www.brashers.com/brashers-auto-auctions-to-be-acquired-by-adesa.
ADESA has signed a definitive agreement to purchase the Brasher family’s eight auto auctions.
ADESA parent company KAR Auction Services, which announced the agreement Wednesday afternoon, said the purchase would be a $283 million (approximately) cash deal.
The transaction must meet customary conditions, including the expiration or termination of the Hart-Scott-Rodino waiting period, before it closes.
KAR expects the deal to close in the first quarter. It plans to fund the purchase with available cash and proceeds from its revolving credit facility (more on that below).
The purchase can give ADESA a stronger foothold in the West, the company said.
Brasher’s locations include Brasher’s Salt Lake, Brasher’s Sacramento, Brasher’s Portland, Brasher’s Boise, Brasher’s San Jose, Brasher’s Northwest, Brasher’s Reno and Brasher’s Fresno.
KAR said that key corporate and local auction personnel for Brasher’s will maintain leadership roles throughout the Brasher auctions.
“The Brasher family is one of the most highly respected families in our industry. It is a tremendous honor that they have agreed to become part of ADESA,” Jim Hallett, KAR chairman of the board and chief executive officer, said in a news release.
“Brasher’s is a premier auto auction with a strong management team that shares our passion for the auction business and desire to provide the best customer service possible. I am also pleased that the members of the Brasher family and other leaders in their business have agreed to join our management team,” he said.
John Brasher, speaking on behalf of his family, added in the news release: “For 67 years, Brasher’s has been synonymous with outstanding auto auctions. We take that commitment to our employees and our customers personally, and do not approach this sale of our auctions lightly. We fully believe that our auctions will reach even greater levels of excellence as part of ADESA.”
Stephane St-Hilaire, CEO and president of ADESA, said in the release: “Brasher’s is a leader among independent auctions with a strong mix of commercial and dealer consignment customers. Along with increasing ADESA’s footprint in three new states, the addition of Brasher’s enhances ADESA’s physical and online buyer bases.
“It also increases our ancillary services, while enabling our sister company, AFC, to develop a presence at Brasher’s eight auction locations. As part of the KAR group of companies, we plan to offer Brasher’s customers the complete suite of KAR’s end-to-end vehicle remarketing services.”
KAR expands Senior Secured Revolving Credit Facility
To facilitate the purchase, KAR exercised the $300 million accordion feature of its existing $250 million Senior Secured Revolving Credit Facility. As such, this credit facility has expanded to $550 million. No other changes to the credit facility’s terms or conditions were made, the company said.
Group 1 Automotive announced several key company changes on Thursday, including the acquisition of a dealer group in the U.K., the divestment of three of its current dealerships, and three internal promotions.
The group has acquired the Spire Automotive Group, which includes 12 dealerships that operate primarily in the north and northwest London area. The acquisition includes four Audi stores, three BMW/MINI stores (with a BMW Aftersales center), two Seat dealerships, one Skoda dealership, one Volkswagen commercial vehicle dealership, and one Jaguar store.
Continuing to operate under the Spire name, the collection of stores is expected to generate roughly $575 million in annualized revenues.
"We are pleased to expand our relationship with BMW and the Volkswagen Group in the U.K. and to expand our relationship with Jaguar Land Rover from Brazil to the U.K.,” said Earl J. Hesterberg, the group’s president and chief executive officer. “We are also delighted to further leverage our scale and strong operating management team in the U.K."
Focusing back on the States, Group 1 has divested three dealerships, including Mercedes-Benz and Volkswagen of Freehold, N.J. and Ira Toyota of Milford, Mass. Collectively, these dealerships generated approximately $160 million in trailing 12-month revenues.
"We continually evaluate our portfolio of dealerships relative to required future capital expenditures and current levels of return on investment and move to dispose of assets that do not offer appropriate returns on invested capital," Hesterberg said.
On the senior management side of the group, the company’s vice president of human resources, Brooks O’Hara, has announced his retirement effective April 1. In response, the following transitions were made effective February 1:
- Frank Grese Jr. named senior vice president of human resources, training, and operations support. (Was regional vice president of the west region)
- Daryl Kenningham named egional vice president of the west region. (Was regional vice president of the east region)
- David Fesmire named regional vice president of the east region. (Was market director of the Houston/Beaumont and Gulf Coast markets.
Mid-South Auction is back in family ownership.
XLerate Group announced on Friday that the Rea family has repurchased XLerate’s Mid-South Auction in Pearl, Miss.
Mid-South, originally founded in 1972, was formerly owned by the Rea family and operated under the name of Rea Brothers Mid-South Auction (RBMSA) until being acquired by American Auto Auction Group (AAAG) in 2010. Rea Brothers’ became a member of the XLerate Group when XLerate acquired AAAG in 2014.
“Because of its strong industry reputation and market leadership, Rea Brothers’ was one of American Auto Auction Group’s initial acquisitions in 2010 and served as a cornerstone of AAAG’s buy-and-build strategy,” XLerate chief executive officer Cam Hitchcock said.
“Under XLerate’s brief ownership, Mid-South’s auction facility was rebuilt after an April 2014 tornado and received significant facility and technology upgrades,” Hitchcock continued.
“After weighing numerous strategic alternatives, we came to believe that this newly renovated sale can better serve Mississippi dealers in the hands of the Rea family,” he went on to say.
John Rea, the managing partner of Rea Brothers’ Mid-South Auction when it was sold to AAAG, added, “Our family owned and operated Rea Brothers’ Mid-South Auction for almost 40 years, and is proud of the brand and organization that we built through hard work, excellent customer service, and a clear sense of integrity and fairness.
“We are glad to have Mid-South Auction back in our family, and we look forward to continuing the personal level of dedication and involvement we have always had for our employees and our customers for four decades,” Rea said.
