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Group 1 Auto Acquires Ford Dealers

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Group 1 Automotive Inc. (GPI - Free Report) revealed that it has acquired four Ford Motor Co. (F - Free Report) dealerships in southwest of London in the U.K. They are located in the towns of Farnborough, Guildford, Wokingham and Bracknell.

The acquisition is expected to generate about $177 million in estimated annual revenues. It will complement Group 1 Automotive’s existing five BMW/MINI dealerships in Farnborough and other market areas south and southwest of London. The dealerships will trade under the “think Ford” brand name.

Last year, Group 1 had acquired Essex Audi dealership in the southeast region of England. The dealership consists of six Volkswagen’s (VLKAY - Free Report) Audi franchises including Stansted Audi, Chelmsford Audi, Southend Audi, Harold Wood Audi, Chingford Audi and Docklands Audi. It expected to generate annual revenues of $275 million.

In 2012, Group 1 acquired 16 franchises with estimated annual revenues of $715.0 million. The company also disposed of six franchises during the year with trailing-12-month revenues of $127.9 million.

Last month, Group 1 announced the acquisition of Shawnee Mission Kia dealership in Overland Park, Kan. as part of its continuous effort to expand brand offerings across the U.S. The acquired dealership is expected to generate $65.0 million in estimated annual revenues. It will complement the company’s existing BMW, MINI and Hyundai dealerships in the Kan. City area.

In the same month, the company also announced that it has entered into an agreement to purchase Brazil's largest automotive retailers UAB Motors Participacoes S.A. This acquisition is a part of the company’s strategy to expand in the fast-growing Brazilian market.

UAB Motors will complement the Group 1’s existing brands of Toyota Motor Corp. (TM - Free Report) with 2 dealerships, Nissan Motor with 4 dealerships, BMW with 4 dealerships and BMW/MINI with 2 dealerships. It will also add four new brands – Renault (3 dealerships), Peugeot (3 dealerships), Land Rover (1 dealership) and Jaguar (1 dealership) to Group 1’s portfolio.

The yet-to-be-acquired dealerships are expected to generate $650.0 million in estimated annual revenues and will boost earnings per share by 3 cents–5 cents in 2013. The deal is expected to close today, Feb 28.

Group 1 Automotive, a Zacks Rank #3 (Hold) stock, posted a 5.3% rise in earnings per share to 99 cents in the fourth quarter of 2012 from 94 cents in the prior-year quarter but missed the Zacks Consensus Estimate by 21 cents. Net income grew 9.4% to $24.0 million from $22.0 million in the fourth quarter of 2011.

Revenues increased 19.3% to $1.9 billion, driven by strong retail new vehicle and used vehicle unit sales. Revenues from new vehicle sales escalated 22.3% to $1.2 billion on a 20.8% increase in unit sales to 33,164 vehicles. Revenues from retailed used vehicles boosted 16.6% to $423.3 million on a 13.5% increase in unit sales to 20,180 vehicles.

Headquartered in Memorial City of Houston, Texas, Group 1 Automotive was founded in 1997. The company is one of the largest automotive retailers in U.S., which provides 31 automotive brands. It has 120 automotive dealerships, 156 franchises and 31 collision centers in the U.S. and the U.K.

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