Group 1 to Acquire UAB Motors - Analyst Blog


Group 1 Automotive Inc. ( GPI ) 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.

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 ( TM ) with 2 dealerships, Nissan Motor Co. Ltd. ( NSANY ) 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. ( LAD ), with a Zacks Rank #1 (Strong Buy), is performing well in the same industry where Group 1 operates.

GROUP 1 AUTO (GPI): Free Stock Analysis Report

LITHIA MOTORS (LAD): Free Stock Analysis Report

NISSAN ADR (NSANY): Free Stock Analysis Report

TOYOTA MOTOR CP (TM): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Business , Stocks

Referenced Stocks: GPI , LAD , NSANY , TM

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