Sinclair Broadcast Group Inc., which owns and operates TV stations, is getting out of the auto retailing business.
Sinclair is selling its 17.5 percent stake in Atlantic Automotive Corp. to Auto Properties LLC, an affiliate of Atlantic Automotive. The price was not disclosed. The deal is expected to be final in the next 90 days.
Atlantic Automotive, of Baltimore, operates 44 dealerships under the name Mile One. The dealerships are in the Washington, Baltimore, and Wilkes-Barre, Pa., areas.
The company also runs a leasing operation. It has a chain of 40 tire stores called Mr. Tire.
Sinclair, of Baltimore, invested $20 million in Atlantic Automotive in December 2002. Sinclair says the investment is worth $21.5 million. The company says it has reaped about $2.5 million in dividends.
Martin Leader, a Sinclair board member, said in a statement that Sinclair decided to stop investing in Atlantic Automotive a year ago. Feedback from shareholders affected that decision, he said.
Sinclair owns, operates, programs or is otherwise involved with 61 TV stations in 38 U.S. markets.
Leader said Sinclair invested in Atlantic Automotive, previously known as Summa Holdings Ltd., because dealerships buy a lot of TV advertising.
The statement said a committee of independent Sinclair directors made the decision to sell the interest in Atlantic Automotive. The directors recommended that Sinclair use proceeds from the sale to pay debts.
Sinclair CEO David Smith personally retains a controlling interest in Atlantic Automotive. Smith is a member of Atlantic Automotive's board of directors.
According to the Baltimore Sun, Smith has a controlling interest in Atlantic Automotive.
Atlantic Automotive paid $500,000 to advertise on Sinclair's TV stations last year, the Sun reported. It sold vehicles and services to Sinclair worth $1.1 million, the newspaper said.
The Sun 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.
The newspaper said Atlantic Automotive is expected to pay $24.9 million in the deal, which runs through 2013.