Group 1 Automotive Inc.
) announced that it has entered into an agreement to purchase
Brazil's largest automotive retailers UAB Motors Participacoes
S.A. This acquisition is a part of the company's strategy to
expand in the fast-growing Brazilian market.
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For the acquisition, Group 1 will pay around $47.4 million in
cash and 1.45 million shares of Group 1 common stock. It will
also assume nearly $62.0 million of UAB's net non-floorplan debt
due to the acquisition.
UAB Motors has 18 dealerships with 21 franchises, and 5 collision
centers in Sao Paulo metro market and the key metropolitan
markets in the adjacent state of Parana. It will complement the
Group 1's existing brands of
Toyota Motor Corporation
) with 2 dealerships,
Nissan Motor Co. Ltd.
) with 4 dealerships, BMW with 4 dealerships and BMW/MINI with 2
dealerships. It will also add four new brands - Renault (3
dealerships), Peugeot (3 dealerships), Land Rover (1 dealership)
and Jaguar (1 dealership) to Group 1's portfolio.
The acquired dealerships are expected to generate $650.0 million
in estimated annual revenues and will boost earnings per share by
3 cents to 5 cents in 2013. However, the acquisition will lead to
$1.5 million in pre-tax deal costs in the fourth quarter of 2012.
The deal is expected to close on Feb 28.
Houston, Texas-based Group 1 Automotive is one of the largest
automotive retailers in the U.S., which sells new and used cars
and light trucks; arranges vehicle financing, service and
insurance contracts; provides automotive maintenance and repair
services; and sells vehicle parts.
In the third quarter of 2012, the company posted an impressive
30.7% increase in earnings per share to $1.32 from $1.01 in the
prior-year quarter. Earnings per share exceeded the Zacks
Consensus Estimate by a penny.
Revenues for the quarter went up 25.9% to $2.0 billion from the
year-ago quarter. The growth in revenues was driven by strong
retail new vehicle and used vehicle unit sales. The company now
has a Zacks Rank #2 (Buy).
Lithia Motors Inc.
), with a Zacks Rank #1 (Strong Buy), is performing well in the
same industry where Group 1 operates.