Park Place Dealerships has reached a $1 billion all-cash agreement to sell its franchise dealerships to a Georgia-based automotive retailer.
Asbury Automotive Group Inc. will acquire 14 of the luxury car dealer's locations. All dealerships are located in Dallas-Fort Worth metroplex, except one Jaguar/Land Rover dealership in Austin.
The $1 billion sell-off is all-cash and excludes vehicle inventory, according to Asbury.
“The decision to sell the company that I have spent the past three decades building has not been an easy one,” said Ken Schnitzer, chairman of Park Place Dealerships. “But now is the time to enjoy my family and friends, as well as explore new opportunities.”
Schnitzer opened his first dealership, Mercedes-Benz in Dallas, in 1987 Since then, his company has grown to 20 dealerships.
Asbury will acquire 17 new vehicle franchises from Park Place through the deal – 15 of which are located in the DFW metroplex. It includes brands such as Bentley, Jaguar, Volvo, McLaren, Maserati.
The transaction includes the Park Place brand and the following dealerships: Mercedes-Benz stores in Dallas, Fort Worth and Arlington, Lexus Plano and Lexus Grapevine, Jaguar/Land Rover DFW and an Austin location currently under construction, Porsche Dallas, Volvo, Bentley Dallas, Rolls-Royce Motor Cars Dallas, McLaren Dallas, and Maserati Dallas. Park Place BodyWerks in Dallas and Fort Worth are also included in the sale.
“I am extremely proud of what we have accomplished and the culture we have built at Park Place,” Schnitzer remarked. “I will keep my hand in the automotive industry by retaining two dealerships and a body shop in Grapevine. DFW is one of the strongest markets in the country, and Texas is a great place to do business. The future is very bright for Park Place Dealerships and the industry.”
Schnitzer will maintain ownership of the Mercedes-Benz and Porsche dealerships in Grapevine, as well as the body shop in Grapevine.
He started Park Place Dealerships in 1987 with a single Mercedes-Benz dealership on Oak Lawn Avenue. He proceeded to create one of the largest luxury dealership groups in the country. According to a presentation on the deal by Asbury, Park Place reported $1.9 billion in annual revenue for the 12 months ended Sept. 30, 2019.
“In the last 32 years, there have been many challenges, opportunities, decisions, and risks,” said Schnitzer. “But when you have a great team by your side, you can accomplish anything. The members of Park Place who’ve contributed their ideas and talents to the growth of the company are the best in the industry.”
In 2005, Park Place Lexus Plano and Park Place Lexus Grapevine were awarded the Malcolm Baldrige National Quality Award by the President of the United States in the small business category. Park Place was the first auto dealer to ever win the award. Park Place Dealerships has more than 2,100 employees.
The deal expands Ausbury's reach in Texas, which will now constitute 36% of its overall market. Asbury currently operates 88 dealerships, consisting of 107 franchises, representing 31 domestic and foreign brands of vehicles. Asbury also operates 25 collision repair centers.
"Park Place is highly regarded as one of the best and most efficient operators of luxury stores in the industry," Asbury's president and CEO David Hult said in a statement. "Their portfolio of stores comes with a strong base of loyal clients and 2,100 long-term team members throughout the high growth Dallas/Fort Worth market.
The purchase price includes $785 million in goodwill, approximately $215 million for real estate and leasehold improvements, and approximately $30 million for parts and fixed assets.
The transaction is expected to close in the first quarter of 2020, and is subject to customary closing conditions.
This transaction is expected to be funded through a combination of Asbury's existing credit facilities, cash flow from operations, and committed financing arrangements. Asbury has secured committed financing, which it expects to replace with permanent financing prior to closing. Ashbury trades on the New York Stock Exchange under the ABG symbol.
BofA Securities served as financial advisor to Asbury Automotive Group and is providing committed financing for the transaction; Hill Ward Henderson and Jones Day acted as legal counsel to Asbury Automotive Group. The Presidio Group served as financial advisor to Park Place Dealerships and Locke Lord acted as legal counsel to Park Place Dealerships.