KAR Auction Services might not nearly be finished acquiring independent auctions, with chief executive officer Jim Hallett saying there are “five to 10 really good strong independents that we would be very interested in acquiring if the opportunity presented itself.”
Back in March, KAR announced that business unit ADESA expanded its presence in Pennsylvania with the acquisition of Pittsburgh Auto Auction in New Stanton, Pa., joining two other ADESA auctions in the region — ADESA Pittsburgh and ADESA PA.
In light of that move, Hallett responded to inquiries from investment analysts after the company reported its Q1 performance about whether more acquisitions are in the company’s future.
“First of all I would say to you that in the pipeline, we feel there’s a number of opportunities, a number of good opportunities,” Hallett said. “There are some very good independents out there. And I’ve always kind of sized it that there’s probably five to 10 really good strong independents that we would be very interested in acquiring if the opportunity presented itself. We know that we can buy these auctions at attractive multiples.
“And I can’t promise you that we’ll have a number of them done before the end of the year. But I can promise you that we’re working on a number of them. And at some point in time we would expect that we’ll get some of these over the line,” he went on to say.
Acquisitions aren’t the only growth avenue KAR is using to expand ADESA’s footprint. On April 9, the company highlighted the development of ADESA Chicago, which will be located in Hoffman Estates, Ill., near I-90. While the auction isn’t expected to open in spring 2016, Hallett touched on the expectations KAR already has for this facility.
“Well, you know, I'm a pretty optimistic guy, but I would say, first of all let's talk about greenfields in general,” he said. “In general, we would tell you that starting a greenfield site usually takes 12 to 24 months to become cash flow positive. And our recent experience in Las Vegas, which was the last greenfield we’d done, was basically cash flow positive in a year.
“I have some very high expectations for Chicago, being the size of the market that it is,” Hallett continued. “And not only the size of the market, but being the location in that Chicago market. Matter of fact, in that location, our major competitor is quite a significant difference in terms of miles to the south. So we think we've really got a prime location there.
“So without spitting out any specific numbers, the third-largest market, we’re well-positioned there with a great location. We know there's a huge buyer network out of that market. I would expect that we would see very strong results in the first 12 months, comparatively speaking, to a greenfield,” he went on to say.
Net Driven has been purchased by Internet Brands, an online media and software services organization that focuses on the automotive, health, legal, home and travel fields.
Acquiring marketing firm Net Driven further solidifies Internet Brands’ presence in the automotive market, which already includes companies such as Autodata solutions, Chrome Data and CarsDirect.
"Net Driven's keen focus on specific niches within the automotive industry has created a thriving business that nicely complements our existing technology solutions servicing automotive OEMs and franchise dealers," said Bob Brisco, chief executive officer of Internet Brands.
Net Driven was founded in 2007 and offers Web presence products such as website solutions, Internet marketing services and social media support.
The company’s primary client base is independent automotive businesses including tire dealers, auto repair shops, auto body shops, used-car dealers and auto parts retailers.
"Internet Brands is the ideal partner with which to continue Net Driven's rapid growth," said Patrick Sandone, CEO of Net Driven. "We're thrilled to be a part of Internet Brands' impressive automotive portfolio and are now in a better position than ever to continue our mission of helping automotive businesses thrive."
Net Driven will continue to operate from its existing headquarters in Scranton, Pa. and retain the company's workforce, and Patrick Sandone will remain president of Net Driven, the companies reported.
MD Johnson, which provides guidance on purchase, sale, analysis, succession, valuation and restructuring of dealerships, recently helped to orchestrate the successful sale of BMW of Tri Cities from Tim Bush to Ralph Martinez.
Officials indicated the dealership will remain named BMW of Tri Cities at its current state of the art facility off of Interstate 82 and Aaron Road on property that Martinez acquired from Bush in a separate transaction. The closing of the transactions occurred after required and customary approvals by the parent automaker.
No sales price was disclosed, according to MD Johnson.
Bush purchased the dealership from long-time Yakima, Wash., dealer Dick Hahn of Hahn Motor Co. Bush then relocated the store to suburban Richland, Wash. Prior to Bush's relocation, officials noted the Tri Cities had not had a BMW dealer for more than 20 years.
Along with the BMW store, Bush had previously owned the Suzuki franchise in the Tri Cities along with his separate pre-owned vehicle business.
“Tim has enjoyed his time in the automobile business and will continue to expand his growing full service automated car wash business in the greater Pasco, Richland and Kennewick areas.” Johnson said about Bush, who is joined in his business by sons TJ and Blake.
Martinez's Town & Country Group also owns Town & Country Honda in Gladstone Ore., a suburb of Portland.
“We are very happy to be a part of the BMW family,” Martinez said.
“BMW is considered at the top of the luxury brands and we are excited to represent them in the Tri Cities,” Martinez went on to say while adding his son, Christopher, has been named general manager of the newly acquired dealership.
DMEautomotive is being purchased by Solera Holdings. An agreement was announced Wednesday morning for Solera to buy the Florida-based company that provides risk and asset management software and services to the automotive and property marketplace.
“Combining DMEa’s proprietary technologies with Solera’s existing portfolio will enable Solera’s customers to increase customer retention and drive loyalty through tailored and frequent digital contact across the entire automotive ownership lifecycle,” Solera said in a news release.
Solera’s existing investments in service, maintenance and repair firms include companies like Identifix, AutoPoint and Service Dynamics. The company expects its DMEa acquisition will close in the fourth quarter of its fiscal year ending June 30.
“The acquisition of DMEa is very exciting for us as it will further enrich our understanding of our customers’ customers on a personalized and household level,” said Tony Aquila, Solera’s founder, chairman and chief executive officer.
“When combined with Solera’s vertical software solutions (SaaS) across the entire automotive lifecycle, this data will create powerful digital content to enhance the ownership experience and strengthen the relationship and transparency between our customers and their customers, resulting in a smoother ride through the ownership lifecycle via technology accessed on any device,” Aquila added.
With plenty of liquidity, the ability to generate cash and ideal financing conditions pushing buyers to make moves, KeyBanc Capital Markets says merger and acquisition activity in the dealership world “remains highly active.”
So expect dealership acquisitions to continue, the company said, which along with robust used-car and parts and service sales should lead to continued growth in the profitability of the retail car business.
Sharing its longer-term forecast for 2015 and 2016 as part of an analysis on its most recent dealer survey, KeyBanc said that “we remain positive on earnings growth for the automotive retail industry, primarily driven by used vehicles and parts and service sales, and accretive acquisitions.”
As the third installment of our series recapping each of those three factors described by KeyBanc, we share more about what the company had to say about M&A activity.
“Buyers are largely driven by their abundant liquidity positions, strong cash generation and low financing rates,” KeyBanc analysts said.
“Management teams of Asbury Automotive, Lithia Motors, Penske and Group 1 Automotive, as well as Warren Buffett and George Soros have reiterated their continued interest in growing operations through acquisitions,” they added.
Just over two weeks ago, Group 1, for example, announced the purchase of Prestige Audi in North Miami Beach, Fla.
Lithia, meanwhile, had a fairly busy year for acquisitions in 2014, and said in its full-year and fourth quarter 2014 earnings release in February that the market continues to buzz.
The company got 2015 rolling by opening Subaru of Clearlake, Texas in January.
“We significantly increased the size of Lithia in 2014, adding annualized revenues in excess of $2.7 billion. We acquired 35 stores and opened one franchise in 2014, and are pleased to have already opened a new store in the Houston, Texas market with Clearlake Subaru,” president and chief executive office Bryan DeBoer said in the release.
“The acquisition market remains active and we continue to seek domestic, import and luxury franchises in cities ranging from mid-sized regional markets to metropolitan markets across the United States,” he added.
The sale of Dent Wizard to Gridiron Capital is now officially finished.
H.I.G Middle Market announced Tuesday that its affiliate has completed the sale of Dent Wizard International to Connecticut-based Gridiron. H.I.G. Middle Market is the dedicated middle market investment affiliate of H.I.G. Capital.
Terry Koebbe, Dent Wizard’s chief executive officer, said: “H.I.G. has been a highly effective partner that provided invaluable operational and strategic guidance. H.I.G.’s support for the company’s growth initiatives put the business on a high growth trajectory that we feel confident will allow us to continue to succeed.”
H.I.G. Capital managing director Fraser Preston called Dent Wizard “an exceptional company with a bright future,” and said the investment in the company “will provide an attractive return for H.I.G. and its investors, which is a testament to Dent Wizard’s successful transformation.”
Tom Burger, managing partner of Gridiron Capital, said: “We are excited to be partnering with an extremely strong team at Dent Wizard. We see numerous opportunities to work with them to build on their success and add value through our prior experience with outsourced services companies.”
Added Koebbe: “We are proud of the growth that we have been able to achieve over the past several years as a standalone company and feel strongly that we are in the early stages of what we can accomplish. We are excited to partner with Gridiron Capital, whom we believe will help us accelerate our growth through their operational expertise and strong industry relationships.”
IHS recently acquired the business assets of Dataium in a move company officials said can provide enhanced capability to IHS Automotive offerings through the extensive compilation of online automotive shopping behavior.
Every month, Dataium observes more than 20 million automotive shoppers across automotive websites and then aggregates, indexes and summarizes this data into key and unique market analytics. IHS explained this aggregated data can predict future sales, optimize automotive audience segments, measure campaign, advertising and website performance and perform additional comparative analysis that help its clients grow sales, lower costs and retain customers.
Scott Key, president and chief executive officer of IHS, added that the Dataium assets will enhance growth in digital business for IHS Automotive and strengthen its analytics offerings across the automotive value chain.
“Dataium’s core products provide added value and functionality to our current lineup of automotive solutions for customers such as OEMs, ad agencies and online publishers,” Key said.
“The addition of the Dataium business assets will create best-in-class capabilities, giving IHS Automotive customers accurate and timely information and analytical tools for enhanced market measurement,” he continued.
Based in Nashville, Tenn., Dataium employs eight people.
Group 1 Automotive announced Tuesday that it has acquired an Audi dealership in Euless, Texas, in the Dallas-Fort Worth metro area. The dealership, which will continue to operate under the name of DFW Audi, is expected to generate an estimated $80 million in annual revenue for the auto group.
“We are pleased to expand our relationship with Audi in the United States,” said Earl Hesterberg, president and chief executive officer at Group 1. “Audi is an exciting luxury brand and we are delighted to add this location to our portfolio of dealerships in the greater Dallas-Fort Worth market.”
Other notable Group 1 Audi dealerships are in South Carolina, Massachusetts, and in the United Kingdom.
More information about Group 1 Automotive can be found here.
MetroGistics, a provider of automotive logistics services, announced today that is has completed a merger of its operations with McNutt Automotive Logistics.
MetroGistics will maintain its headquarters in St. Louis while keeping a satellite office in Clinton, Mo.
“As our two companies have gotten to know each other better, we’ve adapted best practices from each in order to streamline operations and provide the best customer service experience possible,” said Scott Naz, co-founder and managing partner at MetroGistics.
The combined companies now offer a full range of logistics and asset-based transportation solutions to segments including new car manufacturers, used-vehicle marketers, dealerships, remarketers, auctions and to the personally owned vehicle market.
The companies hope, by combining their carrier base, that the merger will allow for more freight to pair up, making loads more efficient; quicken overall process by making dealing with them a one-stop shop; and allow there to be fewer empty miles between shipments.
More information can be found on the MetroGistics website.
KAR Auction Services announced on Tuesday afternoon that business unit ADESA expanded its presence in Pennsylvania with the acquisition of Pittsburgh Auto Auction in New Stanton, Pa.
This location joins two other ADESA auctions in the region, ADESA Pittsburgh and ADESA PA.
The company indicated Chris Angelicchio will continue as general manager of the auction.
“This acquisition demonstrates our continued commitment to grow our physical auction business and expand our geographic footprint,” ADESA president and chief executive officer Stéphane St-Hilaire said. “I look forward to working with the experienced staff at this location to continue the level of service they have provided for more than 35 years.”
KAR also mentioned Dave Angelicchio, former president of the National Auto Auction Association and CEO of Pittsburgh AA, will serve in a consultant capacity.
“It has been a great experience working with ADESA,” Dave Angelicchio said. “And I am confident that ADESA will maintain the personal level of dedication and involvement we have had for our employees and our customers for more than three decades.”
The 200-acre facility is located on the southwest side of Pittsburgh, near the intersection of Interstate 70 and the Pennsylvania Turnpike. This established auction offers seven fully automated auction lanes and full-service reconditioning facilities, including a body shop and mechanical shop.
KAR went on to highlight this acquisition bolsters ADESA’s presence in the Eastern region and complements the company’s current buyer base. This facility has served customers in the area since 1978 and has conducted a weekly sale every Tuesday and a biweekly General Motors closed sale every other Thursday.
