Sonic Automotive, Inc. Acquires 5 Dealerships
9 July 1998
Sonic Automotive, Inc. Announces Acquisition of Five Dealerships
CHARLOTTE, N.C., July 9 -- Sonic Automotive, Inc.
announced today that it has entered into definitive agreements to acquire the
Higginbotham Dealership Group with dealerships in Daytona Beach, Florida and
New Smyrna Beach, Florida; Casa Ford in Houston, Texas; and Economy Honda Cars
in Chattanooga, Tennessee. These dealerships have combined 1997 revenues of
approximately $220 million. Included in these transactions are Acura,
Chevrolet, Ford, Honda, Mercedes, Mercury and Oldsmobile franchises.
These transactions are valued at approximately $46 million. Convertible
Preferred Stock will be issued for approximately 33% of the purchase price and
the remainder will be payable in cash. Sonic Automotive will finance the cash
portion of the purchase price for these dealerships with proceeds from long-
term debt borrowings. The Higginbotham Dealership Group, Casa Ford and
Economy Honda Cars acquisitions are expected to close in the third quarter of
1998.
B. Scott Smith, the Company's President and Chief Operating Officer,
stated "Sonic continues to execute its disciplined acquisition strategy.
We're entering attractive new markets and building market share in our
existing markets. We have increased our brand diversity and expanded our
luxury lines by adding Mercedes and Acura to our brand portfolio."
Higginbotham Dealership Group
The Higginbotham Dealership Group includes Higginbotham Chevrolet-
Oldsmobile, Inc.; Halifax Ford-Mercury, Inc.; and Higginbotham Automobiles,
Inc. (Mercedes-Acura) which includes Sonic's first Mercedes franchise.
Mr. Higginbotham will join Sonic Automotive as President of Retail
Operations, responsible for the day-to-day management and supervision of all
Company-owned dealerships. Mr. Higginbotham has been a dealer/operator for 22
years. Prior to acquiring his first dealership, he spent 12 years with
General Motors and left General Motors as the Assistant National Distribution
Manager.
Halifax Ford-Mercury and Higginbotham Automobiles (Mercedes) received the
highest CSI award from the respective manufacturers for the most recent fiscal
year. Dennis also brings additional acquisition integration experience. Over
the course of his career, Dennis has experience with many of the domestic and
import brands, including Chrysler, Ford, General Motors, Honda, Mercedes and
Toyota.
"I am pleased to join Sonic Automotive," stated Mr. Higginbotham. "I
believe public auto retailers led by experienced dealership managers will be
successful. Sonic has the right strategy and experienced management to lead
the auto retailing sector."
0. Bruton Smith, the Company's Chairman and Chief Executive Officer,
stated "We are thrilled to attract an excellent operator like Dennis to our
organization. Dennis Higginbotham's experience will support our acquisition
growth and operations."
Casa Ford
Sonic Automotive's acquisition of Casa Ford will further expand its
operations in Houston, Texas. This acquisition will give Sonic broad
geographic coverage of the Houston area when combined with the presence of
Lone Star Ford, one of Sonic's original Ford dealerships.
Under the leadership of Mr. Al Paret, principal owner, Casa Ford developed
a successful "one price" or "no haggle" sales process in a highly competitive
market. Scott Smith stated, "We're excited about the opportunity to learn
from Al Paret, a strong operator with high CSI and consistent profitability.
We're particularly excited to learn about a successful application of one
price selling." Al Paret stated, "I'm looking forward to working with Sonic
Automotive and believe I can help Sonic improve its selling processes and
profit margins."
Economy Honda Cars
The acquisition of Economy Honda gives Sonic a Honda franchise and will
strengthen its presence in the Chattanooga, Tennessee market. With this
acquisition, Sonic will increase its operations to eight dealerships with
twelve franchises in this southeastern market. "The Economy Honda transaction
is a perfect example of an 'add-on' transaction to improve our market share
and brand diversity in an existing market," stated Scott Smith.
Hatfield Acquisition
The Company completed its previously announced acquisition of the Hatfield
Automotive Group on July 9, 1998.
Upon completion of these acquisitions, Sonic Automotive will operate 36
dealerships representing 24 different brands and 13 collision repair centers.
Sonic Automotive's 1997 proforma revenues including closed and announced 1998
acquisitions will be approximately $1.8 billion.
Included herein are forward-looking statements, including statements with
respect to anticipated revenue growth. There are many factors which affect
management's views about future events and trends of the Company's business.
These factors involve risk and uncertainties that could cause actual results
or trends to differ materially from management's view, including without
limitation, economic conditions, risks associated with acquisitions and the
risk factors set forth from time to time in the Company's filings with the
Securities and Exchange Commission.