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Utah Business

Earlier this week, Gail Miller and the Larry H. Miller Group of Companies announced a Larry H. Miller dealerships acquisition.

Ashbury Automotive Group acquires Larry H. Miller dealerships

Utah — Asbury Automotive Group, Inc. (NYSE: ABG), one of the largest automotive retail and service companies in the U.S., entered into a definitive agreement with Larry H. Miller Group of Companies (“LHM Group”) to acquire Larry H. Miller Dealerships, the eighth largest dealer group in the US, and Total Care Auto, Powered by Landcar.

“Larry H. Miller Dealerships is one of the most respected automotive dealer groups in the United States with a strong culture and stewardship mentality,” says David Hult, Asbury’s president and CEO. “This acquisition is a unique opportunity to rapidly expand Asbury’s presence into these desirable, high-growth Western markets with strong accretion from day one, with this impressive group and its rich history. Larry H. Miller Dealerships is a well-run operation with long-tenured employees and a senior leadership team equaling over 5,300 passionate team members, all of whom have had a part in building and carrying forward the legacy that Larry H. and Gail Miller founded over 42 years ago. We are thrilled to grow our presence in these states that we believe have appealing economic and demographic growth opportunities while broadening our geographic reach. Our now national footprint, complemented by our digital purchasing capabilities in Clicklane, creates a truly expansive omnichannel platform of dealerships.

“This acquisition will further diversify our total portfolio mix and add approximately $5.7 billion in expected annualized revenues, which positions us well to execute our five-year plan to generate $20 billion in annual revenue by 2025. With these acquisitions, we will exceed our previously published five-year target for M&A within the first year of the plan. We will continue to seek acquisitions that fit our culture and strategy. We believe that this acquisition is truly transformative for Asbury, and we are honored to be the stewards of Larry and Gail’s vision. Additionally, we expect this acquisition to be highly accretive to earnings per share in 2022 and beyond.”

“Since our family’s purchase of a single Utah dealership in 1979, we have been honored to cultivate a strong, values-based culture and customer-first business model within the automotive industry for more than four decades,” says Gail Miller, owner of Larry H. Miller Group of Companies. “We feel a great sense of stewardship to our incredible associates and their families, to our loyal customers and partners, and to the communities where we operate. As always, we believe that being in business is a means to doing good, and this transaction will elevate our ability to continue to enrich lives through our philanthropic efforts as well as reinvest in new ventures.”

“We are proud that Larry H. Miller Dealerships has grown to be one of the largest automotive retailers in the country,” says Steve Starks, CEO of the Larry H. Miller Group of Companies. “Our incredible employees will have the opportunity to be part of Asbury, another well-respected and trusted brand, that brings a national footprint with a best-in-class technology platform. This transaction provides additional opportunities for the LHM Group to further diversify and grow our portfolio of businesses and investments.”

“Larry H. Miller Dealerships, like Park Place, showcase a customer-centered approach that aligns with Asbury’s North Star to be the most guest-centric automotive retailer. We continue to allocate our capital thoughtfully to further this vision,” says Hult.

This transaction will diversify Asbury’s geographic mix, with entry into six Western states: Arizona, Utah, New Mexico, Idaho, California, and Washington, and adds to its growing Colorado footprint. Larry H. Miller Dealerships’ portfolio mix of largely domestic brands has historically delivered strong and stable margins in these markets.

The operating assets acquired include 54 new vehicle dealerships, seven used vehicle dealerships, and 11 collision centers. Combined, Larry H. Miller Dealerships sells over 115,000 new and used vehicles annually.

In addition to the dealerships, Asbury will acquire TCA, a leading provider of service contracts and other vehicle protection products, providing enhanced profitability and cash flow. “TCA is comprehensively integrated with Larry H. Miller Dealerships and presents a compelling opportunity for Asbury to enter this profitable F&I business. Like the dealerships, this service contract company is extremely well run. TCA has historically delivered 20 percent+ EBITDA margins on average,” Hult says.

“We look forward to becoming part of one of the nation’s leading and largest automotive and retail companies,” says Dean Fitzpatrick, president, Larry H. Miller Dealerships. “Asbury is like-minded in terms of our values and stewardship. Their vision to be the most guest-centric company in the industry aligns with our guiding principle to be the best place in town to work and the best place in town to do business.”

Financial impact of the aquisition

The aggregate purchase price of $3.2 billion includes approximately $740 million of real estate. The transaction is expected to close in the fourth quarter of 2021 and is subject to automobile factory approvals and other customary closing conditions. The EBITDA for the twelve months ended June 30, 2021 of these acquired entities is approximately $360 million, which includes day-one cost savings.

Asbury has secured committed bridge financing in support of the acquisition, which it expects to replace with a combination of permanent debt and equity financing prior to closing. The equity portion of the permanent financing is currently expected to be approximately $600 million. Although the transaction is initially expected to take Asbury above its targeted net leverage range of 3.0x, Asbury believes that it can de-lever to near 3.0x over the next 18-24 months given the highly accretive nature of the deal combined with strong free cash flow generation.

The acquisition of these entities, assuming a fourth quarter of 2021 closing date and equity financing of $600 million, is expected to be approximately 14% accretive to 2022 earnings per share with 2024 EPS accretion expected to be approximately 20 percent.

Additional acquisitions under contract

Asbury also has several other strategic acquisitions under contract, which also align with Asbury’s culture and customer-centric model, which are expected to add approximately $900 million in additional annualized revenues. These acquisitions are expected to be funded using existing cash on hand and existing credit facilities.

These additional acquisitions are expected to drive total, inclusive of Larry H. Miller Dealerships, TCA, and the additional acquisitions under contract, 2022 EPS accretion to approximately 20 percent and 2024 EPS accretion to approximately 28 percent.

This press release does not constitute an offer to sell, or a solicitation of an offer to buy, any security. Any offers, solicitations or offers to buy, or any sales of securities will be made in accordance with the requirements of the Securities Act of 1933.

Comments (1)

  • Jinks Dabney

    Put a dealership for Lexus in St George.

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