DETROIT --Baltimore's Sinclair Broadcast Group Inc., which owns TV stations, is getting out of the auto business.
Sinclair is selling its 17.5 percent stake in Atlantic Automotive Corp. to Auto Properties LLC, an affiliate of Atlantic Automotive. The sale price was not disclosed. The deal is expected to be final in the next 90 days.
Atlantic Automotive, of Baltimore, runs 44 dealerships under the Mile One name. The company has dealerships in the Washington, D.C., Baltimore, and Wilkes-Barre, Pa., areas. The company also runs a leasing operation and a chain of 40 tires stores under the Mr. Tire name.
Baltimore-based Sinclair invested $20 million in Atlantic Automotive in December 2002. The company said the investment's value is now $21.5 million, and it has also reaped about $2.5 million in dividends.
Martin Leader, a Sinclair board member, said in a press release that Sinclair decided to stop making investments in Atlantic Automotive a year ago in response from feedback from shareholders.
Sinclair owns, operates, programs or is involved with 61 TV stations in 38 markets.
Leader said Sinclair originally invested in Atlantic Automotive, which was previously known as Summa Holdings Ltd., because dealerships buy a lot of TV advertising. Atlantic Automotive is one of the largest dealers in the mid-Atlantic region, which includes Sinclair's Baltimore TV market.
The statement said the decision to sell was made by a committee of its independent directors, which recommended the money from the sale be used to pay off debts.
David Smith, Sinclair's CEO, is a member of the Atlantic Automotive board of directors. According to the Baltimore Sun, Smith has a controlling interest in Atlantic Automotive.
Atlantic Automotive purchased $500,000 in advertisements from Sinclair's TV stations in 2004. It also sold $1.1 million worth of vehicles and services to Sinclair.
The newspaper also reported that Smith owns half of a partnership that leases dealership properties to Atlantic Automotive. The lease payments to the partnership were $4.5 million in 2004. Atlantic Automotive is expected to pay a total of $24.9 million in the deal, which runs through 2013.
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