When Asbury Automotive Group Inc.'s pending acquisition of Larry H. Miller Dealerships is complete, Asbury CEO David Hult will have gone from leading the industry's smallest publicly traded dealership group to one of the largest.
The $3.2 billion megadeal for Larry H. Miller's 61 stores announced Wednesday positions Asbury to spread its dealership network coast to coast, add thousands of new customers for its Clicklane digital retailing platform and operate its own finance-and-insurance company.
"We believe that this acquisition is truly transformative for Asbury," Hult said in a statement.
In addition to the $5.7 billion in expected annual revenue from Larry H. Miller, Asbury also announced Wednesday that it has stores representing another $900 million in annual revenue under contract. It's the second supersized deal since Hult was promoted to the CEO post in 2018, following Asbury's $735 purchase of eight Park Place luxury dealerships in Texas last year.
It joins a slew of megadeals struck in 2021 across the industry. Those include Lithia Motors Inc.'s April purchase of Michigan's Suburban Collection and announcements made this month by Group 1 Automotive Inc. to acquire 30 dealerships from Prime Automotive Group by late November and by Sonic Automotive Inc. to acquire RFJ Auto Partners Holdings Inc. in December.
George Karolis, president of the Presidio Group, a Denver- and Atlanta-based investment banking and advisory firm, described Asbury's move as a game changer for the company.
"They're not that far out West" now, said Karolis, who once led mergers and acquisitions for Asbury before joining Presidio in 2019. "They were in California years ago, and Oregon, and sold those dealerships to be more of a super-regional group at the time. Now, obviously, this gives them more of a national footprint and more geography to continue to spread their wings from."
The pending acquisitions announced this week mean Asbury is on track to meet its goal to acquire dealerships that add $5 billion in annual revenue to the retailer in the first year of its five-year plan, Hult said. That acquisition target was part of an overarching plan to expand total company revenue to $20 billion as of 2025. Asbury posted revenue of $7.13 billion in 2020.
Asbury, of Duluth, Ga., ranked No. 6 on Automotive News' most recent list of the top 150 dealership groups based in the U.S., with retail sales of 95,165 vehicles. Larry H. Miller Dealerships ranked eighth on that list, with retail sales of 61,097 vehicles in 2020.
On a total company revenue basis, Asbury projected Wednesday that the Larry H. Miller deal and the deals for other stores under contract would move it ahead of all rivals other than AutoNation Inc., Lithia and Penske Automotive Group Inc. Hult said the calculations Asbury made to arrive at that projection took into account the revenue competitors such as Lithia, Group 1 and Sonic are set to gain from their own major acquisition deals this year.