Republic to Buy Webb Auto Dealerships
Republic Industries Inc. is preparing to make a second major foray into Southern California’s lucrative new-car market with the purchase of the eight-dealership Webb Automotive Group, one of the nation’s highest-grossing chains, sources say.
Neither Republic nor Irvine-based Webb Automotive would comment, but industry sources said negotiations have been going on for months and that a letter of intent was signed two weeks ago.
Republic, which is the nation’s largest car dealer, already owns 22 new-car franchises in Southern California and has made no secret of its desire to acquire more. The region is particularly attractive because most major dealers are well-established and profitable.
Webb Automotive, one of the largest auto chains in the U.S., with $493 million in sales in 1996, owns dealerships in Orange and Los Angeles counties. It reportedly made a $13.5-million profit last year.
Sources said Webb Automotive owner Lewis Webb was offered $200 million for the dealership group, half in cash and half in Republic stock. Webb, an avid adventurer and private pilot who recently completed a 14,700-mile around-the-world air race in his twin-engine Cessna, reportedly will retire after selling his business.
Webb recently had heart surgery and “he wants to sell it all,” said one area dealer who knows Webb well.
If completed, the deal with Republic could touch off a battle with Carson-based Nissan Motor Corp. USA, which recently said it would not approve any more sales of its franchises to Republic until the company agreed to limit such acquisitions. Webb Automotive owns a Nissan dealership in Irvine.
Webb Automotive also owns three Toyota dealerships, in Cerritos, Buena Park and Irvine, and a Lexus franchise in Cerritos. That could trigger difficulties with Torrance-based Toyota Motors Sales USA Inc., which recently ended a bitter court battle with Republic by executing a confidential pact limiting the company’s acquisition of Toyota and Lexus franchises.
Officials at Toyota and Nissan declined to comment.
Republic’s appetite for new-car franchises in major markets has raised concerns by some dealers that competition could be stifled, but most dealers “still feel that the long-range success of auto dealerships owned by public companies is uncertain,” said Kevin Allen, executive director of the Orange County Motor Car Dealers Assn. Allen acknowledged that local car dealers are watching the reported Webb-Republic deal closely, but they declined to comment further.
The Webb Automotive acquisition would be Republic’s second major Southern California purchase in less than three months. On Oct. 27, the Florida-based company--already the nation’s largest owner of new-car dealerships--struck a deal to acquire Torrance-based Southern California Auto Group and its 20 dealerships. Final papers in that transaction have not yet been signed. Republic’s AutoNation subsidiary also owns Magic Ford in Valencia and Champion Chevrolet in Los Angeles.
Republic Chairman H. Wayne Huizenga has said he wants AutoNation to be the largest car dealer in all the major auto markets in the country. Since beginning its acquisition binge in December 1996, Republic has acquired 268 new-car dealerships in 17 states, with estimated combined 1997 sales of $10.2 billion. In addition, AutoNation operates a chain of 26 used-car superstores. Its first California location, in Irvine, opened Monday, and the company has plans to build five more in Los Angeles, Ventura and Riverside counties.
Privately owned Webb Automotive was ranked as the 35th-largest new-car chain in the nation based on gross sales. The eight Webb dealerships sold 12,621 new cars and trucks in 1996, the most recent year for which figures are available.
In addition to Toyota of Cerritos and Irvine Nissan, Webb Automotive owns Lexus of Cerritos, Buick Mart in Cerritos, Toyota of Buena Park, Lew Webb Ford in Garden Grove, Volvo of Irvine and Irvine Toyota.
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Lew Webb’s Empire
Automotive firms owned by Webb Automotive Group:
* Lew Webb’s Toyota of Cerritos
* Lew Webb’s Irvine Toyota
* Lew Webb’s Toyota of Buena Park
* Lexus of Cerritos
* Buick Mart (Cerritos)
* Lew Webb’s Irvine Nissan
* Volvo-Irvine
* Lew Webb’s Auto Body (Irvine)
* Lew Webb’s Ford of Garden Grove
Source: Times reports
