Group 1

As of Monday, September 13, 2021, Group 1 Automotive Inc. has committed to purchase Prime Automotive Group. The $880 million deal includes Prime’s 30 stores, nearly all of the assets, real estate, and three collision centers. Last year, Prime Automotive Group generated $1.8 billion in revenue, while the stores sold more than 50,000 new and used cars, proving that this deal is going to pay out well for Group 1.

Prime Automotive Group is based out of Boston, Massachusetts. By acquiring these assets, Group 1 significantly boosts its presence in the Northeast part of the country. Additionally, the current 1,800 employees will be welcomed to the family of Group 1.

Group 1

With the addition of Prime Automotive, Group 1 can now extend its AcceleRide digital retailing process, allowing more customers to take advantage of the innovative offering.This completely online buying platform ensures customers gain access to a variety of cars and competitive financing offers without leaving their homes or office.

President of US and Brazilian operation for Group 1, Daryl Kenningham, said in the press release, “We know Prime’s markets well and the opportunities they represent.  We are also proud to welcome Prime Automotive’s 1,800 employees as new teammates to the Group 1 family. The addition of Prime Automotive enables us to extend our reach of AcceleRide®, Group 1’s industry-leading digital retailing process, to even more customers.”

Sadly, controversy surrounds the deal. Prior to this agreement, Prime Automotive was caught up in some lawsuits. It’s alleged that GPB Capital Holdings, the majority owner of Prime, was dealing in a Ponzi-type scheme. The U.S. Securities and Exchange Commission was investigating the claims, with a formal filing occurring this past February. In the allegations, thousands of investors raised more than $682 million for GPB to purchase dealerships. The investors were supposed to receive 8% annual returns but haven’t seen a distribution since 2018.

Related: Dealership M&A transactions continue. Why is buy-sell activity so high?

Because of this ongoing investigation, the transaction with Group 1 must be federally approved. Whether this holds the transaction up or not is unknown.

Group 1 plans to complete the purchase with cash, financing, and lines of credit. The company currently runs 188 dealerships across the United States, United Kingdom, and Brazil. It also operates 48 collision centers. The majority of Group 1’s dealerships are located in Texas. However, they can also be found in Massachusetts, New Jersey, and New Hampshire. Because of this deal, Group 1 will expand its presence into New York and Maine.

This news was announced just after LMP Automotive Holdings agreed to purchase Texas dealerships that represent Nissan and GM brands. This agreement will cost $141 million for the assets and real estate of the dealerships. However, it should add about $250 million in annual revenue, along with $27 million in adjusted EBITDA for LMP. While the names of the dealerships haven’t been released yet, this news proves that acquisitions are on the rise.

LMP chief executive officer Sam Tawfik stated, “This brings us a step closer to our goal of having approximately 100 dealerships in our network by the end of next year. We project these additions to our network have the potential to add approximately $5 billion in revenue, $229 million in adjusted EBITDA, or $8.80 in adjusted EBITDA per share.”

As we make our way into the final quarter of 2021, all eyes will be on additional mergers and acquisitions that disrupt the dealership world.

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