AutoNation adds 6 Texas dealerships
Possible changes in U.S. tax policy may stoke dealer M&A activity
Mike Jackson: “This is the biggest industry acquisition deal in the U.S. in a decade."
AutoNation Inc., the nation's largest auto retailer, is buying six Texas dealerships that generate $575 million in annual revenue.
AutoNation is buying three Volkswagen stores, an Audi dealership and a Porsche store in the Dallas market from Boardwalk Auto Group, and Spring Chrysler-Jeep-Dodge-Ram in the Houston market from Alfred Flores and Bruce Glascock.
After the deals close, AutoNation will have 50 franchises in Texas, the company said.
The six stores are expected to retail more than 14,000 new and used vehicles in 2012, according to AutoNation.
"This is the biggest industry acquisition deal in the U.S. in a decade," AutoNation CEO Mike Jackson wrote on his Twitter page today.
Boardwalk Audi and Boardwalk Porsche are in Plano; Park Cities Volkswagen is in Dallas; Boardwalk Volkswagen is in Richardson; and McKinney Volkswagen is in McKinney.
"The franchises are in attractive automotive retail locations, and the acquisition will enhance our brand mix in the Dallas-Fort Worth market," Jackson said in a statement. "We also look forward to welcoming the Boardwalk customers and 350 associates into the AutoNation family and expanding our representation of the Audi, Porsche and Volkswagen brands."
Boardwalk Auto Group, owned by Scott Ginsburg, will continue to own and operate Boardwalk Ferrari, Boardwalk Maserati, Lamborghini of Dallas, Ferrari of San Francisco and Maserati of San Francisco.
The deals remain subject to customary terms and conditions, including manufacturer approval, AutoNation said in its statement. It was not immediately clear when the acquisitions would be completed.
AutoNation and Boardwalk officials weren't immediately available for comment.
Separately today, AutoNation said its dealerships sold 22,571 light vehicles in November, a 21 percent increase from a year ago.
For the month, import brand sales rose the most, up 27 percent to10,909. Premium luxury sales increased 25 percent to 5,218, while domestic model sales rose 9 percent to 6,444, according to company.
AutoNation, of Fort Lauderdale, Fla., ranks No. 1 on the Automotive News list of the top 125 dealership groups in the United States with retail sales of 224,034 new vehicles in 2011.
AutoNation joined competing dealership groups including Penske Automotive Group Inc. in snapping up stores ahead of potential changes to the nation's tax policy next year. Penske said in November and October that it bought dealerships in Wisconsin and California that will contribute about $255 million of revenue.
Acquisitions by public U.S. auto retailers, including AutoNation and Penske, plunged 55 percent in this year's first half to $103 million, the most recent data available from Presidio Automotive, an advisory firm. That may be changing ahead of potential increases to U.S. tax rates next year.
"The fourth quarter has shown a significant uptick in activity," Alan Haig, a managing director for Presidio based in Chapel Hill, N.C., said today by telephone. "That could be due to dealers wanting to exit in 2012 for tax reasons, to lock in the current capital gains tax rate."
Taxes are scheduled to rise and U.S. budget cuts will occur if President Barack Obama and congressional Republicans don't reach an agreement on fiscal matters by Dec. 31.
Spending on acquisitions probably fell further behind last year's pace through the third quarter, said Haig, who oversaw acquisitions for AutoNation before joining Presidio.
Neither AutoNation nor Penske disclosed the terms of their acquisitions.
AutoNation had forgone acquisitions this year after spending $64.2 million on purchases through last year's first nine months, the company said in its Oct. 25 quarterly earnings statement.
Penske said cash used in acquisitions and other investments, net of cash acquired, was $137.8 million through Sept. 30, down from and $232.1 million a year earlier, according to a Nov. 2 regulatory filing.
Presidio, which advises sellers of dealerships, wasn't involved in the AutoNation transactions announced today. Owners of dealerships who are considering sales may be particularly concerned about an increase in capital gains tax rates, Haig said.
"We do see some pickup in activity," he said. Presidio is "busier now than we have been all year."
Bloomberg contributed to this report.
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