Immediate growth also is on the horizon for Atlantic, which has several stores under construction that are expected to open by year end. At that point, Staluppi said, Atlantic will operate 21 dealerships. Those new points are included in the deal with LMP, Atlantic CFO Robert Dito told Automotive News. Staluppi said he expects Atlantic’s net income for 2020 will jump by $15 million.
Future dealership acquisitions under the Atlantic banner are possible. LMP CEO Samer Tawfik said this month that LMP, which went public in December 2019, intends to roll up more dealerships through Atlantic.
The acquisition agreement furthers LMP’s aggressive growth goals. The small company, which had $17.7 million in cash on hand at the end of June, has said it aims to acquire as many as 50 new-vehicle stores by next fall. It currently owns none.
Since July, LMP has announced deals to buy all or part of nine franchised dealerships and three used-vehicle stores in four states for a total of about $120 million. Those acquisitions are expected to close starting at the end of November, LMP executives said this month.
If those previously announced purchases and the deal with Staluppi are finalized, LMP would have a total of 26 franchised dealerships, not including the Atlantic stores under construction. Tawfik said this month that LMP plans to add 30 to 40 stores in 2021.
The Atlantic dealerships and logistics business are expected to contribute to LMP an estimated $1.6 billion in revenue and $38 million in net income on an annualized basis in 2021, LMP said. Atlantic Auto is expected to generate about $52 million in net income overall in 2021, according to Dito.
The deal calls for Staluppi to retain ownership of Atlantic’s real estate, which LMP will lease for five years, Staluppi said.
Tawfik told Automotive News that Staluppi plans to provide financing of $50 million for the transaction. Another about $140 million would come from a combination of corporate debt and the issuance of stock. The rest, he said, would likely be funded through working capital and/or loans taken out against the blue-sky value of individual dealerships. Blue sky is the intangible value of a dealership, including goodwill.
