Asbury Automotive to Acquire Larry H. Miller Dealerships and Total Care Auto

Asbury Automotive (ABG) has inked a deal with Larry H. Miller Group of Companies to acquire Larry H. Miller Dealerships and Total Care Auto for an aggregate purchase price of $3.2 billion. The transaction price includes $740 million of real estate, with the transaction expected to close in the Q4 of 2021. ABG shares rose 2.22% to close at $203.24 on September 29.

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The automotive retail and service company is acquiring the eighth largest dealership group in the U.S., with over 60 stores in the Western U.S. The two acquisitions will add about $5.7 billion in annualized revenue to Asbury Automotive’s base and are expected to generate significant shareholder value.

Additionally, the acquisition is expected to position the company well to achieve its five-year plan of generating $20 billion in annual revenue by 2025. (See Asbury Automotive stock charts on TipRanks)

“We will continue to seek acquisitions that fit our culture and strategy,” said David Hult, Asbury’s President and CEO.

The operating assets that Asbury Automotive is acquiring include 54 new vehicle dealerships and seven used vehicle dealerships. The company will also gain access to eleven collision centers, in addition to TCA, a leading provider of service contracts and car protection products.

According to the company, the acquired assets should expand Asbury Automotive’s footprint into desirable high-growth markets, with strong accretion from day one. It should also diversify Asbury’s geographic mix into six western states: Arizona, California, Utah, New Mexico, Idaho, and Washington, and enhance its growing Colorado footprint.

Recently, Bank of America Securities analyst John Murphy reiterated a Buy rating on Asbury Automotive but lowered the price target to $288 from $296, implying 41.70% upside potential to current levels.

Consensus among analysts is a Moderate Buy based on 1 Buy and 2 holds. The average Asbury Automotive price target of $224.33 implies 10.38% upside potential to current levels.