Texas-based luxury car dealer sells for $1 billion
Asbury Automotive Group Inc. is making a $1 billion bet on luxury-car demand getting bigger in Texas.
The new-car retailer, which is already one of the biggest in the U.S., announced Thursday it’s acquiring Dallas-based Park Place Dealerships in an all-cash transaction. The closely held dealer group owns 17 franchises mainly selling European luxury-brand vehicles including Mercedes-Benz, Jaguar, Land Rover and Porsche. It also has a McLaren store.
“Park Place is highly regarded as one of the best and most efficient operators of luxury stores in the industry,” David Hult, Asbury’s chief executive officer, said in a statement. The Duluth, Georgia-based company expects the acquisition will add about $1.9 billion in revenue. Premium brands will now exceed half of Asbury’s sales, and more than a third will come from Texas.
Asbury shares surged as much as 6% to $121.38, an intraday record. The stock is up 72% this year.
JPMorgan Chase & Co., which has a neutral rating on Asbury shares, said the debt the retailer is taking on will make it the most levered dealer it covers. But adding Park Place to the fold should reduce Asbury’s exposure to cyclical swings by spreading out its geographic presence and adding parts and service revenue, analyst Rajat Gupta wrote in a report.
Asbury expects to close the acquisition in the first quarter and realize more than $20 million in annual synergies. The company operates 88 dealerships with 107 franchises representing 31 domestic and foreign brands.