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Group 1 (GPI) to Buy Prime Automotive Group Assets for $880M

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Group 1 Automotive Inc. (GPI - Free Report) has entered into an agreement with Prime Automotive Group to purchase the latter’s assets for about $880 million, according to a filing with the U.S. Securities and Exchange Commission.

Per the deal, which is expected to close by late November 2021, Group 1 will be purchasing the 30 dealership locations and three collision centers throughout New England and the Mid-Atlantic region. These assets generated revenues of about $1.8 billion in 2020 and sold more than 52,000 new and used vehicles. Prime’s portfolio includes some of the renowned dealerships like Audi, BMW, Ford, Honda, Volkswagen, and Volvo, to name a few.

Group 1 has been a success in the North-Eastern United States for many years and this opportunity will enable it to take the advantage of its existing cost structure and to further diversify its U.S. foothold. The acquisition will increase the company’s global dealership count to 218 (from the current count of 188) and add 1,800 employees to the Group 1 family. Group 1's total U.S. dealership count would increase to 147, which includes 46 locations in the Northeast. Upon the completion of the buyout, the auto retailer’s brand mix will be approximately 43% luxury, 36% non-luxury import, and 21% non-luxury domestic. Year to date, Group 1 has completed $420 million of acquired revenues, and the proposed transaction is expected to take its total acquired revenues to at least $2.25 billion.  

The firm is enthusiastic about the partnership and stated that the addition of Prime Automotive broadens its market reach of AcceleRide, its online retailing initiative. Notably, Group 1 sold a record 5,600 vehicles through Acceleride in the last reported quarter. In second-quarter 2021, Group 1 reported a profit per share of $10.31, beating the Zacks Consensus Estimate of $10.10 per share. It generated revenues of $3.7 billion, surpassing the Zacks Consensus Estimate by 10.72%.

Shares of Group 1 have surged 74.6% over a year compared with the industry’s 62.1% rise.
 

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Group 1 — which competes with players like Asbury Automotive Group, Inc. (ABG - Free Report) , AutoNation, Inc. (AN - Free Report) , and Lithia Motors Inc. (LAD - Free Report) — currently has a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

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