Asbury Automotive, which owns auto dealerships around the country, said it will acquire Larry H. Miller dealerships and related service contract business Total Care Auto for a total of $3.2 billion, to become the fourth-largest U.S. auto retailer.
The acquisitions announced Wednesday will add about $5.7 billion in annual revenue to Asbury's business, which brought in $7.13 billion in revenue in 2020 and has 91 locations.
The deal will add 54 new vehicle dealerships, seven used vehicle dealerships and 11 collision centers, and expand Georgia-based Asbury's footprint in the western United States by gaining it entry into Arizona, Utah, New Mexico, Idaho, California and Washington. Each franchise location averages more than $100 million in annual revenue.
"Their density in these high-growth markets would have taken us years to build out," said Asbury CEO David Hult.
Asbury will get about $740 million in real estate with the deal, which is expected to close in the fourth quarter subject to auto factory approvals. Asbury plans to pay for the purchase with a combination of debt and equity.
Family-owned Larry H. Miller Dealerships, based in Sandy, Utah, has more than 5,300 employees and sells more than 115,000 vehicles annually.
Total Care Auto, which is also based in Sandy and is integrated with Larry H. Miller Dealerships, sells extended vehicle coverage, prepaid maintenance, gap coverage and other protection plans. Its profit margins average more than 20 percent.
Instead of buying vehicle protection plans and making a profit selling them, acquiring Total Care Auto's business means Asbury would be "making a margin on both sides that money all stays in house," Hult said.
The transaction announced Wednesday is part of Asbury's plan to pursue mergers and acquisitions that will allow it to generate $20 billion in annual revenue by 2025. Asbury also has more acquisitions under contract to add another $900 million in annual revenue.