Group 1 selling its operations in Brazil

After failing to achieve what it felt was sufficient scale for its auto retail operations in Brazil, Group 1 Automotive Inc. has decided to divest its business there.

The Houston-based dealership group's subsidiary GPI SA LLC has entered into a share purchase agreement with Original Holdings S.A. of Brazil, with UAB Motors Participacoes Ltda., a wholly-owned subsidiary of Group 1, as an intervening party.

Original will buy equity interests of UAB from Group 1 for 510 million Brazilian reals in cash, or about $93 million. UAB operated 17 stores that generated about $230 million in annual revenue as of year-end 2020.

The transaction is expected to close by the end of the second quarter of 2022.

With the divestiture of its Brazil operations, Group 1's global dealership count will fall to 174, subject to the addition of about 30 Prime dealerships that Group 1 anticipates buying in a separate transaction expected to close in the current quarter.

"Over the past eight years we developed a successful automotive dealer group in Brazil representing Land Rover, BMW, Honda and Toyota," Group 1 CEO Earl Hesterberg said in a release. "Unfortunately, despite our best efforts, we were unable to attain critical mass or meaningful scale. Therefore, we decided that redeploying the capital invested in our Brazilian operations to other near-term growth opportunities is in the best interest of our shareholders."

Group 1 ranks No. 4 on Automotive News' list of the top 150 dealership groups based in the U.S., with retail sales of 140,221 new vehicles in 2020.