Crown Group Inc., a Dallas-based investment firm, has agreed to buy its second buy-here-pay-here used-car chain this year.
Crown will pay $41 million, mostly in cash, for America's Car-Mart Inc., a chain of 30 used-car dealerships based in Rogers, Ark., and owned by Fleeman Holding Co.
Crown, a publicly traded company, announced the deal Tuesday, Dec. 2, and expects it to close in January. The company estimates its earnings per share will rise by about 40 cents in the 12 months following.
Car-Mart, founded by the Fleeman family 18 years ago, posts annual revenue of $52 million. In its most recent fiscal year, which ended May 31, it sold about 11,600 vehicles, with an average price of between $4,500 and $5,000.
In February, Crown purchased a majority of Paaco Automotive Group, an Irving, Texas-based chain of eight used-car dealerships. Paaco, also a buy-here-pay-here company, will add four outlets by the end of January.
Crown expects 1999 revenues from the two chains to top $130 million.
'We like the industry, and we think these are two very well-managed companies,' said Crown CEO Edward McMurphy.
Crown will keep Car-Mart's existing management team, led by COO Nan Smith. Crown also retained Paaco's management team, including CEO Larry Lange and President Daniel Chu.
McMurphy said he has no plans to combine the two chains, but will look at ways to increase efficiency at the subsidiaries.
Although both chains primarily serve subprime retail customers, they have different focuses. Car-Mart operates its 30 dealerships primarily in rural areas in Arkansas, Oklahoma, Texas and Missouri. Paaco targets Hispanic customers in Texas' metropolitan areas.
While Paaco sells fewer vehicles than Car-Mart - about 4,800 units a year - its revenues are higher because its average price per vehicle exceeds $10,000, according to Crown.
McMurphy said Crown, which went public in 1986, probably will build its auto presence by opening more Paaco and Car-Mart outlets. He is interested in acquiring other used-car chains.
Crown's other subsidiaries include a subprime mortgage lender, a bulk container company, an extended-stay lodging company and an Argentina-based casino operator.