Asbury Automotive Group, 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 to acquire Larry H. Miller Dealerships, the eighth largest dealer group in the U.S., 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,” said David Hult, Asbury's president and chief executive officer. “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.
“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.”
Steve Starks, chief executive officer of the Larry H. Miller Group of Companies, celebrated the deal.
“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,” Starks said. “This transaction provides additional opportunities for the LHM Group to further diversify and grow our portfolio of businesses and investments.”
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%+ EBITDA margins on average,” Hult said.
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 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%.