The major acquisition deal between Asbury Automotive Group Inc. and Texas retailer Park Place Dealerships is back on, though several stores shy of the original agreement.
Asbury will now acquire eight Park Place dealerships, both companies said Monday, taking a second chance on a sale that was derailed in the first weeks of the coronavirus pandemic.
The new deal is valued at $735 million and is expected to close Aug. 31.
Asbury shares rose 9.3 percent to close Tuesday at $85.73 in New York.
The Duluth, Ga., retailer said in December that it would buy 10 luxury Park Place stores in Texas with 17 new-vehicle franchises in the Dallas and Fort Worth market. Asbury terminated the deal days before it was scheduled to close because of declining business amid the pandemic and time constraints related to the deal's financing arrangements.
Improved new- and used-vehicle sales and an uptick in parts and service business in May and June allowed Asbury to regain footing amid the pandemic and move forward with a revised deal, Asbury CEO David Hult said in a statement.
"In March, we had to step away from the transaction due to lack of visibility around COVID-19, but after seeing the rebound off the April low, we can proceed with a more refined deal under more flexible and favorable terms," Hult said.
The nation's seventh-largest new-vehicle retailer will now acquire eight stores housing 10 new-vehicle franchises, including Mercedes-Benz and Sprinter stores in Dallas, Fort Worth and Arlington, Lexus Plano and Lexus Grapevine, Jaguar Land Rover Dallas Fort Worth, Porsche Dallas and Volvo Dallas. The stores will generate about $1.7 billion in expected annualized revenue, Asbury said.
Nearly half of Asbury's revenue will be generated from luxury brands after the sale, up from 36 percent, Asbury said, and almost a third of the group's revenue will come from the Texas market.
The Premier Collection, which was originally part of the $1 billion deal announced in December, will remain under Schnitzer's ownership. That includes the group's Bentley Dallas, Rolls-Royce Motor Cars Dallas, McLaren Dallas, Maserati Dallas, Koenigsegg and Aston Martin Dallas stores.
Without these stores, the sale will cost Asbury $685 million of goodwill and approximately $50 million for parts, fixed assets and leaseholds, though the amount excludes vehicle inventory. Two collision centers and an auto auction also were included in the deal.
Luxury brands historically deliver stronger and more stable margins than domestic and midline import brands, Asbury said in a government filing. They're also more resilient to financial downturns and maintain higher levels of gross profit from parts and service departments.
"As I said last December when we first announced the sale of Park Place, it is time for me to take a step back and enjoy my family and friends," Ken Schnitzer, chairman and founder of Park Place, said in a statement.
Schnitzer will also retain Mercedes-Benz Grapevine, Sprinter and Porsche Grapevine, in addition to the body shop in Grapevine and the Select subscription service, which were not included in the sale's first iteration. Park Place also has a Jaguar Land Rover store in Austin, which will not be a part of the Asbury sale.
Asbury will also take the Park Place brand, as per the original agreement. A new name for the group will be announced later this year, according to Park Place spokeswoman Carolyn Alvey.