LMP Automotive Holdings Inc., which this month purchased its first six franchised dealerships in West Virginia, Florida and Tennessee, plans to acquire a majority stake in two Chrysler-Dodge-Jeep-Ram stores in New York.
The company, which started as a used-car seller and vehicle subscription provider and went public in December 2019, said Tuesday that it has an acquisition agreement to buy 85 percent stakes in Central Avenue Chrysler-Jeep-Dodge-Ram in Yonkers and White Plains Chrysler-Dodge-Jeep-Ram from Jonathan Grant and partners.Grant will stay on and operate the stores as dealer principal, LMP CEO Samer Tawfik said.
The stores' brands are part of Stellantis, the newly formed automaker created by the merger of Fiat Chrysler Automobiles and PSA Group.
LMP said in a news release that it expects the transaction to close in June. Tawfik said the company will spend about $17 million, plus other costs, to acquire the stake. LMP is not buying the dealership real estate, he said.
In a regulatory filing, LMP on Thursday said the purchase price for both stores was $24.5 million.
Half of the money needed for the acquisition will be funded by bank financing, some will come from its balance sheet and LMP will issue common stock to the store partners, Tawfik said.
LMP said it will pay for the acquisition through bank financing, common stock and money on its balance sheet.
"We expect this partnership to significantly increase LMP's revenues in the important New York Northeast region, along with materially enhancing profitability," Tawfik said in a statement.
LMP said the acquisition of the two Chrysler stores would boost its revenues by about 50 percent and add about $5.6 million in pretax income annually.
Shares of LMP fell 11 percent to close at $16.93 on Tuesday in New York.
Last week, LMP announced plans to add 80 to 100 dealerships through mergers and acquisitions by the end of 2022. It also is under contract to buy 85 percent stakes in a Hyundai store, a Subaru dealership and two used-vehicle stores in West Virginia. The company last week said those deals would be closing in the "coming weeks."