Republic to Buy 20 New-Car Dealerships in the Southland
Republic Industries Inc., moving to become a major player in Southern California’s competitive new-car market, announced Monday that it will buy Southern California Auto Group and its 20 dealerships.
The all-stock deal is part of a $250-million expansion of Florida-based Republic’s huge and growing auto retailing empire. Republic also said Monday that it is buying Sutherlin Automotive Group of Atlanta, Hillard Auto Group of Texas, BMW of Bellevue in Washington and Hollywood Nissan of Hollywood, Fla. Together the purchases add 39 dealerships to the Republic fold.
The deals--announced the morning after Republic Chairman H. Wayne Huizenga’s Florida Marlins won the World Series--bring the company’s new-car network to 199 dealerships in 17 states. Since December, Republic has become the nation’s largest single owner of new-car dealerships, with about $6 billion in annual sales.
Southern California Auto Group’s dealerships have about 1,000 employees in Los Angeles, Orange and San Bernardino counties.
Analysts say that Monday’s announcement is notable for its size but is not surprising.
“We always thought they were going to buy as much as they could,” said analyst Keith Bossey of Robert M. Cohen & Co. What remains to be seen, he cautioned, is “how they are going to bring that to the bottom line.”
For Torrance-based Southern California Auto Group, the issue was survival.
“When you boil it down, the key fact is that if you can’t beat ‘em, you’d better join ‘em,” said company President Jerry Heuer. “It was to our benefit to join the largest operation in the country.”
Heuer said Republic intends to acquire other California dealerships and that Auto Group’s deal, hashed out over the last 10 months, will make it Republic’s “point man,” managing many of those acquisitions. The merger “is good for us and good for our employees,” he said.
As is typical with Republic acquisitions, Heuer and Auto Group founder Bill Adkins signed long-term employment contracts and will remain in control of daily operations. Southern California Auto Group will run under its own name as a unit of Republic.
The acquisition makes Fort Lauderdale-based Republic an instant heavyweight in one of the nation’s key car markets.
The purchase also is likely to intensify Republic’s battle with Honda Motor Co., the only auto maker still fighting Republic’s efforts to consolidate car dealerships under one owner.
Costa Mesa Honda is one of the dealerships owned by Southern California Auto Group. Torrance-based American Honda Motor Co., which filed a federal lawsuit against Republic, is expected to add its opposition to the sale of the Costa Mesa dealership. The suit claims Republic is violating Honda policy prohibiting public companies from owning more than 50% interest in any dealership. The suit was dismissed by a federal judge in Los Angeles last month, but Honda is appealing, a spokesman said.
Southern California Auto Group, started 24 years ago by Adkins as a single Nissan dealership in Redondo Beach, had 1996 revenue of $430 million and sold an estimated 20,000 new and used cars last year.
Republic already owned Magic Ford in Valencia and Champion Chevrolet in Los Angeles. The latest deal adds dealerships in Torrance, Manhattan Beach, Beverly Hills, Costa Mesa, Newport Beach, Anaheim and Redlands.
The purchase gives Republic its first Mercedes-Benz, Rolls-Royce and Bentley franchises.
It also plays to the company’s strategy of clustering new-car dealerships around its AutoNation USA used-car superstores in an effort to capture car buyers in key markets by providing them an unmatched slate of choices.
Republic has said it intends to open six AutoNations and a used-car reconditioning facility in Southern California over the next 18 months. The first AutoNation store in the area is scheduled to open in January in Irvine.
In addition to the 20 Southern California dealerships, Republic’s Sutherlin acquisition will give it 12 dealerships in Atlanta, Alabama and Florida, which had a total of $340 million in revenue in 1996, while its Hillard purchase will add five Fort Worth-area dealerships with $135 million in sales. The Bellevue BMW dealership had $35 million in sales last year, and the Florida Nissan dealership posted sales of $45 million.
The purchases are expected to be completed in the first quarter next year.
Republic stock dropped $3.13 a share to $30 on the New York Stock Exchange.
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Expanding Auto Empire (Orange County Edition)
Florida’s Republic Industries Inc. announced plans to buy Southern California Auto Group. One of the largest new car dealership owners in the region, the local group sold about 20,000 cars and light trucks last year. Its dealerships:
* Anaheim Mazda-Pontiac-Buick
* Beverly Hills Ford
* Beverly Hills Infiniti
* Costa Mesa Honda
* Costa Mesa Infiniti
* Infiniti of Santa Monica
* Land Rover of South Bay
* Manhattan Ford
* Manhattan Toyota
* Newport Auto Center (Audi, Bentley, Chevrolet, Porsche, Rolls-Royce)
* Redlands Ford
* South Bay Autohaus (Mercedes-Benz)
* South Bay Volvo
* Torrance Nissan
