Lithia to buy 9-store Carousel group in Midwest from Pohlad Cos.

Lithia Motors Inc. will buy the nine-store Carousel Motor Group from the Pohlad Cos. conglomerate, Pohlad said in a statement Wednesday, as the auto retail giant continues its Midwest expansion.

Pohlad, whose portfolio includes the Minnesota Twins baseball team, said it expects the Carousel sale to close in "the next six to eight weeks." Terms were not disclosed.

The acquisition would give Lithia eight stores in Minnesota, a state where the nation's No. 1 auto retailer has no locations. Lithia CEO Bryan DeBoer told Automotive News in 2021 that Minneapolis was among the markets it was looking at.

Lithia will also buy Hudson Ford in Wisconsin, located just across the border from Minneapolis and St. Paul. Lithia has three Wisconsin stores, but they are located on the other side of the state in Madison and the Milwaukee area.

In Minnesota, Lithia will buy Audi Minneapolis in Golden Valley, Audi St. Paul in Maplewood, BMW of Minnetonka, Coon Rapids Chrysler-Dodge-Jeep-Ram, North Branch Chevrolet, Porsche Minneapolis, Porsche St. Paul in Maplewood and Ferrari store Twin Cities Performance in Golden Valley.

The deal appears to clear Pohlad's entire automotive portfolio.

"Over the last 15 years, Carousel Motor Group has built a strong network of dealerships and served thousands of customers in our community, thanks in large part to its team of talented and committed employees," Pohlad Executive Chair Tom Pohlad said in a statement. "Carousel Motor Group's reputation for excellence and success in our market has poised them for growth. We are confident Lithia Motors Inc. is the right partner to take them to the next level."

A Lithia spokesperson said the company does not comment on acquisitions until they are completed.

Daniel Imbro, an auto retail analyst for Pohlad deal adviser Stephens, estimated the Carousel group would bring Lithia $500 million to $750 million in annual revenue.

"We are encouraged to see Lithia continuing domestic M&A after faster international growth in [the second half of 2023], and we continue to see plenty of runway for domestic consolidation," Imbro wrote in a note to investors.

Lithia bought a Canadian store and entered the United Kingdom with a megadeal for Jardine Motors Group during the first half of 2023, and it worked to expand further into the U.K. during the second half of the year.

Lithia bought the three-store Arden Auto Group in the U.K. for an unspecified amount in August, according to an October regulatory filing. In October, Pendragon shareholders agreed to Lithia's £397 million offer — the equivalent of $482 million under the exchange rates at the time of Lithia's Oct. 2 bid — to buy Pendragon's 160 stores, fleet business and a piece of a dealership management system company slated to be spun off as part of the deal. Pendragon expects the transaction to close no later than Jan. 31.

Lithia, of Medford, Ore., ranks No. 1 on Automotive News' list of the top 150 dealership groups based in the U.S., with retail sales of 271,596 new vehicles in 2022.