An announcement revealing Prime's destiny has been long anticipated. Prime's majority owner, GPB Capital Holdings, an alternative-asset management firm, has been marred by scandal and numerous lawsuits and faces allegations of conducting a Ponzi-like scheme by the U.S. Securities and Exchange Commission. The SEC in February filed a lawsuit against the firm, former CEO David Gentile and two related companies and associates alleging securities fraud. Gentile and two others were also indicted on criminal charges including securities fraud.
Despite GPB's woes, Group 1 said it sees success in Prime. In March, it bought two Toyota stores in Massachusetts from Prime, which has domestic, luxury and import dealerships.
"The opportunity to acquire well run dealerships in a market we are familiar [with], coupled with great brands and our ability to further leverage our industry-leading AcceleRide digital platform made this a natural fit for our company," Pete DeLongchamps, Group 1's senior vice president of manufacturer relations, financial services and public affairs, told Automotive News in an email.
The sizable transaction requires the approval of a court-appointed monitor, who as part of the SEC's case is overseeing dealership operations and safeguarding GPB-owned assets for thousands of investors who provided hundreds of millions of dollars that GPB used to buy dealerships.
DeLongchamps said last week that Group 1 executives had not talked with the monitor, Joseph Gardemal of consulting firm Alvarez & Marshal Holdings in Washington, D.C., but didn't foresee concerns with obtaining his approval.
"We expect no issues," DeLongchamps wrote in an email.
Gardemal, through a spokeswoman, declined to comment.
Group 1 also said it is not concerned about getting acquisition approvals from Volkswagen Group of America and Audi of America Inc. — two brands that GPB and Prime are tangled in litigation with. Prime has received termination notices for two Volkswagen dealerships and one Audi dealership.
Prime currently has 31 dealerships, but only 30 are part of this transaction. It's unclear which store isn't part of the deal, nor why. A Prime spokesman referred questions to Group 1.
A summary of the agreement, signed Sept. 12, says the deal will close within 75 days, "provided that the closing conditions are satisfied or waived," according to a Group 1 regulatory filing last week. That would mean a closing by Nov. 26 or Nov. 27.
It's unclear what would happen if that target were not reached.