The Massey group dealerships to be acquired by Sonic represent 16 dealerships with estimated annual revenues of $1 billion. Of the 16 dealerships, 13 represent the Cadillac brand.
"With these acquisitions, we are raising our 2002 earnings per share target to $2.38 to $2.45," says O. Bruton Smith, Sonic's chairman and chief executive officer. "For a full year in 2003, we expect the Massey group acquisition to increase earnings per share $0.30 to $0.40."
The acquisition is subject to customary closing conditions, including manufacturers' approval, and is expected to close in the second quarter of 2002. Consideration for the acquisition will be in the form of cash and 1.47 million shares of Sonic Class A Common Stock. The shares to be issued will be restricted from sale for one year after closing, but will have certain piggyback registration rights in the event of a future underwritten stockoffering.
"With this announcement, Sonic has exceeded our previously stated acquisition target for the first three quarters of 2002 to announce the acquisition of dealerships representing at least $800 million in annual revenue," Smith says. "We expect our acquisition pace to slow over the next several quarters as we integrate the Massey dealerships. However, we do expect to continue acquisition activity with a focus on markets with existingoperations and an established management team."
Of the 16 dealerships to be acquired, 11 are in markets where Sonic has an established management team and infrastructure. In these existing markets, the acquisition will improve brand diversity, build local market share and help Sonic capture the benefit of locally available economies of scale, Smith says. Two significant new markets for Sonic will be added with the addition of Denver and Detroit.
Massey was represented by Stephens Inc. of Little Rock, AR.
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