Group 1 Automotive to Acquire Five Dealerships And is Awarded Lexus Companion Dealership
12 March 1998
Group 1 Automotive to Acquire Five Dealerships And is Awarded Lexus Companion Dealership
Two New Markets Added and Annualized Revenues Increase to $1.6 Billion
HOUSTON, March 12 -- Group 1 Automotive, Inc. , a
leading operator and consolidator in the automotive retailing industry,
announced today that it has signed definitive agreements to acquire five
automobile dealerships in two new markets, with revenues of approximately
$300 million and retail unit sales of over 11,000 cars and trucks. Upon
completion of these and the previously announced acquisitions, Group 1's
annualized revenue run rate will approximate $1.6 billion, representing over
68,000 retail car and truck sales. The consideration for the four separate
transactions is approximately $25 million cash and 1,216,000 shares of Group 1
common stock.
The acquisitions include the Johns Automotive Group, with one Chrysler,
Plymouth, Jeep franchise and one Chevrolet franchise located in Albuquerque,
N.M.; Flamingo Ford located in Homestead, Fla., which will be operated as a
part of the previously announced Group 1 Ford operations in South Florida;
Highland Chrysler, Plymouth, Jeep, Dodge located near Austin, Texas, which
will be operated as a part of the Group 1 operations in Austin; and Luby
Chevrolet located in Denver, Colo. The acquisitions are subject to customary
closing conditions, including approval of various manufacturers, government
agencies and completion of due diligence.
In addition, the Company announced that Lexus, a division of Toyota Motor
Sales, U.S.A., Inc., has granted to a subsidiary of Group 1 a new Lexus
Companion Dealership in South Houston near NASA's main facility. The Company
expects the store to commence operation in late 1998 and begin to contribute
to earnings in 1999.
Johns Automotive Group is a leading operator in the Albuquerque market.
The Johns and their management team will execute long-term employment
contracts and retain their current duties. In announcing the transaction, Ken
Johns said, "In the changing landscape of automotive retailing, we believe the
continued enhancement of service to local customers will depend to a large
extent upon efficient associations by local dealerships with larger, national
organizations. This permits economies of scale otherwise unavailable."
Cindy Johns added, "We considered all of the alternatives available for
the future of our company and felt that our affiliation with Group 1 was the
best decision for the Johns family, our employees and our customers. No
changes will occur within our business. Ken and I will continue to manage the
dealerships and our employees will continue to serve our customers. But we
will all have more tools available to us than we would ever have had as an
independent dealership."
Florida-based Flamingo Ford will strengthen Group 1's market position in
South Florida and will become a part of the previously announced Group 1
acquisition of the Carroll Automotive Group. "After 50 great years selling
Fords, I have decided it is time for me to retire," said Joe Hayden, owner of
the dealership. "My sons-in-law, however, want to continue in the business.
Group 1 allowed all of us to accomplish our objectives. I can look forward to
retirement and they can be secure with employment agreements to continue to
manage the dealership. I am very happy for my family, my customers and our
family of employees."
Luby Chevrolet, one of largest dealerships in Colorado, is located in the
Lakewood area of Denver. Its owner-operator, Dick Fleischman, will continue
to manage the operation under a long-term contract with Group 1. "I am
extremely pleased to have the opportunity to become associated with Group 1,"
said Fleischman. "I look forward to assisting them in the expansion of their
presence in our community. Our company was founded in 1920," he continued.
"It is the first Chevrolet dealership in the Denver area and has been operated
as a family business since its inception."
B.B. Hollingsworth, Jr., Group 1's chairman, president and chief executive
officer, said, "We are very pleased that these outstanding owners chose to
become a part of the Group 1 family of automobile dealerships. With these
acquisitions we continue to execute our strategy of enhancing geographic
diversity by establishing new positions in two great car and truck markets --
Albuquerque and Denver -- and expanding our market position in the Austin and
South Florida markets."
"We are also gratified with the confidence in Group 1 that Toyota has
demonstrated in granting us a new Lexus Companion Dealership. Lexus is one of
the leading automobile products in America, and with our retailing expertise,
we believe this new location will be very successful."
Group 1 was founded to become a leading operator and consolidator in the
highly fragmented automotive retailing industry and completed its initial
public offering in October 1997. Upon completion of these acquisitions,
expected during the second quarter of 1998, and the previously announced
acquisitions, Group 1 will own 53 dealership franchises comprised of 24
different brands, and 13 collision service centers located in Texas, Oklahoma,
New Mexico, Colorado, Florida and Georgia. Through its dealerships the
company sells new and used cars and light trucks, provides maintenance and
repair services, sells replacement parts and arranges related financing,
insurance and service contracts.
This press release contains certain forward-looking statements within the
meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934,
which involve known and unknown risks, uncertainties or other factors not
under the company's control which may cause the actual results, performance or
achievement of the company to be materially different from the results,
performance or other expectations implied by these forward-looking statements.
Some of these risks and factors include, but are not limited to, those
disclosed in the company's October 29, 1997 Prospectus filed with the
Securities and Exchange Commission.
SOURCE Group 1 Automotive, Inc.