Group 1 to purchase 30 Prime Automotive shops for $880 million

Prime ranks No. 18 on Automotive Information‘ checklist of the highest 150 dealership teams based mostly within the U.S., retailing 31,529 new autos in 2020. It generated greater than $2.6 billion in income final yr.

Prior to now few years, Prime has offered greater than a dozen shops that weren’t in its core Northeast market. This yr, Prime offered 5 dealerships, together with two Massachusetts Toyota shops, which Group 1 bought in March.

Prime’s majority proprietor, GPB Capital Holdings, has been ensnarled in quite a few lawsuits and this yr was accused by the U.S. Securities and Change Fee of working a Ponzi-like scheme. A federal monitor was appointed to supervise GPB Capital and dealership operations as a part of the SEC case, which was filed in February.

Many of the dealerships concerned within the sale are a part of the GPB Automotive Portfolio, a restricted partnership made up of 1000’s of traders who raised $682.9 million. GPB used the funds to purchase dealerships. Traders have been promised 8 % annual returns, however distributions stopped in late 2018.

The Prime transaction have to be authorized by the monitor, Group 1 mentioned in a regulatory submitting. 

Group 1 mentioned it will pay for the deal utilizing money, strains of credit score and financing. The retailer mentioned that it has entered into an settlement with Wells Fargo for a $250 million bridge mortgage to assist pay for the transaction.

A spokeswoman for Prime referred remark to Group 1 and a spokesman for GPB couldn’t instantly be reached for remark. 

Group 1 of Houston ranks No. 4 on Automotive Information‘ checklist of the highest 150 dealership teams based mostly within the U.S., retailing 140,221 new autos in 2020 and producing income of greater than $10 billion.

Group 1 has 188 dealerships within the U.S., U.Okay. and Brazil, plus 48 collision facilities. It has eight areas in Massachusetts, 4 in New Hampshire and 5 in New Jersey, based on its web site. Maine and New York can be new states for the group.

A big proportion of Group 1’s dealerships are in Texas.

As soon as the Prime shops are acquired, Group 1 mentioned it would have 147 U.S. dealerships, together with 46 Northeast areas.

The general public auto retailers, household workplaces and a few giant non-public sellers have been considered desirous about shopping for Prime, which has shops in New York, New Jersey, Massachusetts, New Hampshire and Maine.

Group 1 mentioned it has already acquired dealerships representing $420 million in annualized income this yr and with the Prime deal could have acquired dealerships representing a minimum of $2.25 billion in income.

Group 1 CEO Earl Hesterberg in July informed analysts that Group 1 anticipated to “announce some U.S. acquisitions within the months forward.” The general public retailer in July mentioned it purchased seven dealerships within the U.Okay.

The corporate has mentioned this yr that it has monetary functionality so as to add $1 billion or extra in annual income by way of acquisitions.

“We proceed to prioritize exterior progress in our capital allocation course of, and we’re optimistic that we are going to have useful alternatives because the yr progresses,” Hesterberg informed analysts in July.