Sonic Automotive, Inc. Announces Acquisitions
7 April 1999
Sonic Automotive, Inc. Announces Acquisitions of Eight New Dealerships and Closes Two Previously Announced AcquisitionsCHARLOTTE, N.C., April 6 -- Sonic Automotive, Inc. announced today that it has entered into definitive agreements to acquire four of the five dealerships owned by the Manhattan Dealership Group in the Washington, D.C. area: Reading Buick-Pontiac-GMC Truck and Reading Toyota in Baytown, Texas; Shottenkirk Honda in Pensacola, Florida; and Classic Dodge in Mobile, Alabama. These dealerships collectively had 1998 revenues of approximately $270 million. Combined, these transactions are valued at approximately $56 million. A combination of Convertible Preferred Stock and Common Stock will be issued for approximately $15 million of the purchase price and the remainder will be payable in cash. All of these acquisitions are expected to close by the end of the third quarter of 1999. Sonic Automotive is also pleased to announce that it has closed its previously announced acquisitions of the Tom Williams Automotive Group in Birmingham, Alabama and Bondesen Chevrolet-Oldsmobile-Cadillac in Deland, Florida. In 1999, the Company has closed ten dealership acquisitions representing approximately $440 million in 1998 revenues. Including the dealerships listed above, Sonic Automotive has announced definitive agreements to acquire 20 dealerships representing approximately $750 million in 1998 revenues. "Hub" Acquisition The acquisition of the Manhattan Dealership Group gives Sonic Automotive its first presence in the Washington, D.C. market area, which is one of the premier luxury vehicle markets in the United States. The Company will now have operations in the states of Virginia and Maryland. The dealerships being acquired include Lexus of Rockville and Rockville Porsche Audi in Rockville, Maryland; BMW of Fairfax in Fairfax, Virginia; and Nissan Jeep of Waldorf in Waldorf, Maryland. These dealerships have won awards such as the Elite of Lexas Award, and management has served on BMW, Porsche and Audi dealer councils. O. Bruton Smith, the Company's Chairman and Chief Executive Officer, stated, "Sonic Automotive is proud to add the Manhattan Group to its family of dealerships. Management of the Manhattan Group brings to Sonic innovative service and parts business practices, expense controls and compensation plans. These programs have led to industry leading profit margins." "Spoke" Acquisitions Sonic Automotive is also acquiring Reading Buick-Pontiac-GMC Truck and Reading Toyota in Baytown, Texas. This "spoke" acquisition will increase the number of the Company's Houston-area dealerships to six and further diversifies its Houston-area portfolio. Sonic will now own and operate Ford, Chevrolet, Cadillac, Oldsmobile, Pontiac, Buick, GMC, Chrysler, Plymouth, Jeep and Toyota franchises in this market. Shottenkirk Honda in Pensacola, Florida and Classic Dodge in Mobile, Alabama will complement existing dealerships in the Company's Alabama and northern Florida region. The Company is acquiring its third Honda franchise and 22nd Chrysler franchise. B. Scott Smith, the Company's President and Chief Operating Officer, stated, "Our acquisition strategy continues to include building market share in our existing markets. This regional growth enables Sonic to leverage existing management and infrastructure to improve profit margins of acquired dealerships. The benefits of these spoke acquisitions are readily apparent in cost savings such as the over 40% average reduction in advertising costs Sonic has achieved in the Houston market. Additional Toyota, Honda and Chrysler spoke acquisitions improve our mix of brands and continues our efforts to be less dependent on any single brand." First Quarter Operations O. Bruton Smith stated, "Sales and profit performance in our dealerships was robust in the first quarter of 1999. The benefits of our operating strategies are reflected in continued operating margin improvements when compared to the prior year. Company management is comfortable with analysts' earnings estimates for the first quarter." Sonic Automotive, Inc. is one of the leading automotive retailers in the United States, with operations in Alabama, Florida, Georgia, Maryland, North Carolina, Ohio, South Carolina, Tennessee, Texas, and Virginia. Upon completion of these acquisitions, Sonic will operate 111 franchises and 28 collision repair centers. 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 recent filings with the Securities and Exchange Commission.