Sonic Automotive, Inc. Announces Acquisitions of Eleven New Dealerships
20 July 1999
Sonic Automotive, Inc. Announces Acquisitions of Eleven New Dealerships and Closes Seven Previously Announced Acquisitions
CHARLOTTE, N.C., July 20 -- Sonic Automotive, Inc
announced today that it has entered into definitive agreements to acquire the
Freeland Automotive Group with dealerships in Fort Myers, Florida and Naples,
Florida; Integrity Dodge in Las Vegas, Nevada; Joe Camp Ford in La Porte,
Texas; Altman Dodge in Charleston, South Carolina; and Southlake Volvo in
Atlanta, Georgia. The dealerships being acquired have estimated 1999 revenues
of approximately $285 million.
Combined, these transactions are valued at approximately $54.0 million. A
combination of Convertible Preferred Stock and Common Stock will be issued for
approximately $11.2 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 fourth quarter of 1999.
Acquisition Closings
Sonic Automotive is also pleased to announce that it has closed as
previously announced acquisitions of Lute Riley Honda in Dallas, Texas; the
Newsome Dealerships in Columbia, South Carolina and Florence, South Carolina;
the Lloyd Dealerships in Panama City, Florida; Superior
Oldsmobile-Cadillac-GMC in Chattanooga, Tennessee; Freedom Chevrolet (formerly
Fitzgerald Chevrolet) in Charlotte, North Carolina; Lone Star Nissan and Lone
Star Oldsmobile (formerly Sam White Motor City) in Houston, Texas; and Classic
Dodge in Mobile, Alabama.
In 1999, the Company has closed 21 dealership acquisitions totaling
approximately $925 million in 1998 revenues. Including the dealerships listed
above and transactions that have yet to close, it has announced definitive
agreements to acquire 19 dealerships totaling approximately $505 million in
1998 revenues.
"Hub" Acquisitions
The acquisition of the Freeland Automotive Group creates a new "hub" for
the Company in southwest Florida as it cotinues to consolidate dealerships in
that market. Sonic now has a presence in many of the most attractive Florida
markets such as Fort Myers, Tampa, Clearwater, Daytona, Pensacola and Panama
City. The dealerships being acquired include Freeland Motors (Mercedes-Benz),
Freeland BMW, Freeland Honda, Freeland Volkswagen, Freeland Nissan and Naples
Nissan.
The Company is also acquiring Integrity Dodge as a new "hub" dealership in
Las Vegas, Nevada. Clark County, which includes Las Vegas, has added more
people to its population than any county in the state of Nevada and was the
second fastest growing county in the nation between 1990-1998. Sonic plans to
capitalize on this opportunity for continued growth by establishing its first
dealership in the exciting Las Vegas market to create a platform for future
acquisitions.
"We are continuing to selectively enter new markets with attractive
demographics for automobile retailing. Fort Myers is one of the highest
income markets in the United States and perfectly suited for BMW, Mercedes and
Honda dealership operations. Las Vegas is one of the fastest growing markets
in the United States and generally under-dealered. We're excited to enter
these new markets with attractive fundamentals for automotive retailing,"
stated O. Bruton Smith, the Company's Chairman and Chief Executive Officer.
"Spoke" Acquisitions
Sonic Automotive is also acquiring Joe Camp Ford in La Porte, Texas;
Altman Dodge in Charleston, South Carolina; and Southlake Volvo in Atlanta,
Georgia. These "spoke" acquisitions will complement the Company's existing
operations in established Sonic regions.
With the addition of Joe Camp Ford, Sonic will now own and operate three
Ford franchises in the Houston, Texas market and a total of seven dealerships
with revenues of approximately $425 million. Allman Dodge will be the
Company's third Charleston, South Carolina dealership. Southlake Volvo is
Sonic's second Volvo franchise in Atlanta, Georgia and its third dealership in
that market.
"After two years of experience with our 'hub and spoke' acquisition
strategy, we are more convinced than ever this strategy works. The synergies
and economies of scale of consolidated ownership within markets are real and
very impressive. Sonic's acquisition team is devoting the majority of its
time to identifying acquisitions in markets where we are established," stated
B. Scott Smith, the Company's President and Chief Operating Officer.
Acquistion Pipeline
Recently, the Company completed a successful secondary offering of common
stock in which it raised net proceeds of $85.4 million to fund pending
acquisitions. Subsequently, Sonic has increased its acquisition line of credit
with Ford Motor Company from $100 to $150 million. The Company continues to
find opportunities to acquire attractive dealerships within its valuation
framework. Sonic has capital available to complete its acquisition strategy,
including significant cash flow generated from operations.
Sonic Automotive, Inc is one of the leading automotive retailers in the
United States, with operations in Alabama, Florida, Georgia, Maryland, Nevada,
North Carolina, Ohio, South Carolina, Tennessee, Texas, and Virginia. Upon
completion of these acquisitions, Sonic will operate 121 frnachises 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.
Contact: Theodore M. Wright, Chief Financial Officer of Sonic Automotive,
Inc., (704) 532-3347
J. Todd Atenhan, Investor Relations of Sonic Automotive, Inc.,
(888) 766-4218
Internet Address: http://www.sonicautomotive.com