Two years after announcing its mega acquisition of Larry H. Miller Dealerships, Asbury Automotive Group Inc. said it is “in discussions” to buy another top 25 dealership group, Jim Koons Automotive Cos.
“No definitive agreement has been entered into, and accordingly no assurance can be provided that any definitive agreement will be signed or that any transaction will result from these discussions,” Asbury wrote in a government filing Tuesday. “Asbury does not intend to make any further announcements regarding these discussions until either a definitive agreement has been entered into or discussions are terminated.”
A successful purchase of Jim Koons Automotive would give Asbury 20 new-vehicle stores and one used-only dealership in the Washington, D.C., area. It also would put Asbury back on track for its goal of adding $6.2 billion in revenue through acquisitions by 2025, with the Koons group reporting $3.2 billion in 2022 revenue. Asbury has made no purchases and has divested stores since announcing its target in April 2022.
Seaport Research Partners analyst Glenn Chin estimated Asbury could pay $640 million to $800 million for the Koons group if the sale price were calculated at 20 to 25 percent of its revenue.
Jim Koons Automotive, of Vienna, Va., ranks No. 23 on Automotive News‘ list of the top 150 dealership groups based in the U.S., with retail sales of 26,188 new vehicles in 2022. Asbury, of Duluth, Ga., ranks No. 5, with retail sales of 151,179 new vehicles last year.
Asbury CEO David Hult alluded to a potential deal in the works during Asbury’s second-quarter earnings call July 25, though he did not disclose the prospective target.
“We are aggressively in conversations with acquisitions now,” Hult said then. “Obviously, we haven’t announced anything because we haven’t been able to land something that meets our criteria in the space and brands that we want. We’re hopeful with our current [dialogue] that something will come together. But, as you know, these things take time, and you just have to play them out.”
The Koons group carries Buick, Chevrolet, Chrysler, Dodge, Ford, GMC, Hyundai, Jeep, Kia, Lexus, Mercedes, Ram, Toyota and Volvo franchises and has rooftops in Delaware, Maryland and Virginia.
Chin, in an investor note, called the Koons group “a large, well-run group of stores” that would boost Asbury’s revenue by 20 percent.
“The Koons footprint also complements [Asbury’s] nicely,” he said, noting that Asbury has just four Virginia stores.
