Group 1 Automotive Inc. has completed the purchase of 27 dealerships from Prime Automotive Group — about a week ahead of its planned date to close on the mega transaction it announced in September that was expected to cost $880 million.
Group 1, of Houston, said the closing to date included “substantially all the assets,” including 27 of 30 dealerships originally announced in the deal, real estate and three collision centers.
“We are pleased to add these great brands and new teammates to our company,” Group 1 CEO Earl Hesterberg said in a statement. “This action will further leverage our cost structure, diversify our footprint, and broaden our customer base.”
At least one store won’t be sold to Group 1. Industry experts say it’s possible Group 1 ran into issues with manufacturer framework agreements that limit how many stores auto retailers can operate of the same brand and in certain regions.
Prime is under contract to sell its Toyota Route 2 dealership in Lancaster, Mass., to dealer Kurt Koch in the next few weeks, according to a source familiar with the plans. Koch owns several dealerships.
It wasn’t immediately clear what was happening with the other two dealerships that were part of the original deal.
Most of Prime’s executive management team, including CEO Todd Skelton and COO Pete Lebish, won’t be staying with Group 1, the same source told Automotive News.
The Group 1 acquisition gives the nation’s fourth-largest new-vehicle retailer more scale in the Northeast. It also will serve as a platform to help it grow its digital retailing platform AcceleRide.
Group 1 now has 217 dealerships in the U.S., United Kingdom and Brazil. Last week, it said it would sell its dealerships in Brazil by mid 2022.
The company said it has now completed acquisitions this year that will add $2.4 billion in annual revenue.
The transaction also closes a chapter for Prime Automotive, of Westwood, Mass. The group over the past several years had grown to one of the largest privately owned dealership groups in the country. But its majority owner, GPB Capital Holdings, an alternative asset management firm, has been accused of operating a Ponzi-like scheme by the U.S. Securities and Exchange Commission and faces numerous lawsuits and state inquires.
GPB’s former CEO David Gentile and two associates were indicted in February on charges of conspiracy to commit securities fraud, conspiracy to commit wire fraud, and securities fraud. Gentile also was charged with wire fraud.
