Sonic Automotive, Inc. is to purchase substantially all of the Don Massey dealerships, the 19th largest dealer group in the United States. The 16 Massey group dealerships, including 13 Cadillac shops, have estimated annual revenues of $US1.0 billion. “This acquisition continues the execution of our strategy to overweight our representation of luxury brands; in this case, Cadillac, said Sonic chairman and CEO O. Bruton Smith.
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“Cadillac has an outstanding product plan and management team, with a solid future as General Motors’ principal luxury car brand. Cadillac has announced plans to introduce five brand new products in the next 18 months. New leadership has reinvigorated Cadillac and General Motors, and we’re pleased to become a bigger part of General Motors’ dealer network.” Smith said Sonic Automotive was raising its 2002 earnings per share target to $2.38 to $2.45 and, for the first full year in 2003, expected the Massey group acquisition to increase earnings per share by $0.30 to $0.40. The acquisition is subject to conditions, including manufacturers’ approval, and is expected to close in the second quarter of 2002. Payment will be in the form of cash and 1,470,588 shares of Sonic Automotive, Inc. Class A Common Stock. “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. We expect our acquisition pace to slow over the next several quarters as we integrate the Massey dealerships,” Smith said. “However, we do expect to continue acquisition activity with a focus on markets with existing operations and an established management team.” After completion of the acquisitions, Cadillac is expected to represent approximately 12 percent of Sonic’s brand portfolio while General Motors’ brands will account for approximately 20 percent. The Massey acquisition also includes 13 collision repair centres, which will increase the number Sonic owns by 45 percent.
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