Asbury Automotive Group Inc. said it will borrow $1.5 billion and sell 3.3 million new shares to fund its $3.2 billion acquisition of the Larry H. Miller Dealerships group.
Asbury obtained a bridge loan for the purchase but said in September it expected to ultimately pay for the Larry H. Miller deal by taking on debt and selling $600 million in stock. The deal is expected to close this quarter.
Asbury said the transaction would take it beyond its desired leverage ratio. However, the company expected it could pay down debt and approach that level again in 18 to 24 months.
Fitch, Moody’s and S&P Global all assigned non-investment-grade ratings Tuesday to Asbury’s new $1.5 billion in debt, but neither Moody’s nor S&P Global changed their overall ratings on Asbury because of the borrowing. Fitch rated Asbury as a whole for the first time Tuesday, assigning the group a non-investment-grade BB score.
Asbury, of Duluth, Ga., ranks No. 6 on Automotive News‘ list of the top 150 dealership groups based in the U.S., with retail sales of 95,165 new vehicles in 2020. Larry H. Miller, of Sandy, Utah, ranks No. 8, with retail sales of 61,097 new vehicles.
Asbury offered 3.3 million shares at $182 and gave underwriters the option of buying another 495,000 shares at a discount.
Shares in Asbury fell 1.45 percent to close at $182.20 on Wednesday following the pricing announcement.
