Company adds eight dealerships in Metro
Chicago plus six luxury/premium brands in auto mall in
nearby Bloomington/Normal, IL
EDMONTON and CHICAGO, March 22,
2018 /PRNewswire/ - AutoCanada (TSX:ACQ) (or the
"Company") today announced it has entered into a definitive
agreement to purchase Grossinger Auto Group ("Grossinger"), a
successful family business that has been retailing new and used
vehicles in Illinois for 90 years.
Grossinger generated revenue of US$401
million (C$513 million) in
2017 from dealerships representing 11 different manufacturers. The
acquisition includes eight metro dealerships in Chicagoland,
selling and servicing five different brands. The agreement also
includes six luxury and premium brands in an auto mall under one
roof in Bloomington/Normal, Illinois, approximately a two-hour
drive southwest of Chicago. The
acquisition diversifies the AutoCanada portfolio adding four new
brands – Toyota, Honda, Lincoln
and Volvo – and extends its geographical presence into the U.S. for
the first time.
Transaction Rationale
The U.S. market provides
AutoCanada with highly attractive growth opportunities. While
AutoCanada broadens its relationships in the U.S., the current
growth strategy and performance strength in Canada remains on track. Grossinger offers
well established assets, a large customer base and significant
potential benefit that could be realized through the implementation
of enhanced marketing and customer relationship management
practices.
"This is a pivotal move for AutoCanada as this U.S. acquisition
broadens our geographical reach and brand diversification through
adding a combination of domestic, import and luxury dealerships to
our portfolio," said Steven Landry,
President & CEO. "This is exactly the kind of acquisition
that will be instrumental to accelerating our growth. It is a
well-established business that is immediately accretive to our
earnings and brings new valuable OEM relationships. Acquiring a
cluster of dealerships in Chicago
gives us a significant presence in a major urban market and follows
our pattern of success in Canada."
"My business partner and co-president of the Grossinger Auto
Group, Gary and I have always had tremendous passion for our
business and a deep appreciation for our outstanding personnel and
loyal customers," stated Caroline
Grossinger. "Once we decided to sell our business we needed
to ensure we found a purchaser who was aligned with our priorities
of providing employee security, continuity of our community
relationships, and our focus on the customer experience. We were
able to find those priorities within the AutoCanada team. We
are looking forward to the franchises operating under the very
successful AutoCanada team with much success and prosperity in the
future."
Platform Leadership
A majority of the acquired
dealerships will continue to operate under the Grossinger name and
local store leadership and staff will be encouraged to remain,
ensuring continuity in each dealership. As is the case in
Canada, success in U.S. automotive
retailing is enhanced through longstanding relationships with
customers who have been well-served by local dealers.
AutoCanada has existing senior management talent with prior
experience in the U.S. which it will draw from to build on the
continued success of the Grossinger business. Mr. Richard Zanetti, an experienced dealer operator
from New York, will oversee the
platform of dealerships. Mr. Zanetti currently leads
AutoCanada's dealership platform in Calgary, Alberta and will relocate to
Chicago to manage the newly
acquired group. Mr. Zanetti will also have a localized U.S.
management team in the Chicago
area to assist in operating the dealerships.
Mr. Landry also has extensive U.S. automotive experience, having
spent 12 years in Detroit working
with Fiat Chrysler Automobiles (FCA) leading U.S. sales and
marketing, including direct oversight of corporately owned retail
dealerships. Mr. Landry is a dual American-Canadian citizen and
will be the responsible executive for the dealerships.
Transaction Details
AutoCanada will pay approximately
C$110 million (US$86 million) for Grossinger and will finance
the transaction through a combination of funds drawn on the
recently announced syndicated credit facility and payments received
from the Company's recent divestiture of dealerships in
Canada. The acquisition is subject
to customary conditions and is expected to close in the second
quarter of 2018.
Additional Information on the Grossinger Auto
Group
Grossinger is the oldest and longest continuously
operated automotive retailer in Illinois, operating with 200 service bays
across the platform and employing over 700 people. In 2017, the
acquired dealerships sold 7,626 new vehicles and 7,304 used
vehicles.
The acquired dealerships are in and around the metropolitan
Chicago
area:
Chicago Metro
Grossinger City Autoplex (Chevrolet & Cadillac)
Grossinger City Toyota
North City Honda (formerly Grossinger Honda)
Lincolnwood, IL
Grossinger Toyota North
Grossinger Hyundai North
Grossinger Kia
Palatine, IL
Grossinger Chevrolet Palatine
Grossinger Hyundai Palatine
Bloomington/Normal, IL
Audi, Lincoln, Mercedes-Benz,
Subaru, Volvo, Volkswagen
Additional Information on Chicagoland
The Chicago metropolitan area, or Chicagoland, is
the third largest metropolitan area in the US, with a population
estimated at 9.4 million people. It is the main driver of economic
growth in Illinois, accounting for
over 80 per cent of overall activity in the state. Metropolitan
Chicago accounts for more than 25
per cent of overall economic activity in the Great Lakes region. The Chicago region is the third largest retail
auto market in the US.
Conference Call and Investor Presentation
A conference
call to discuss this transaction will be held on March 22, 2018 at 12:00 pm
ET (11:00 am CT, 10:00 am MT). To participate in the
conference call, please dial 888.231.8191 approximately 10 minutes
prior to the call. An investor presentation will be referenced
during the conference call and is available on the AutoCanada
website at:
http://www.autocan.ca/investors/presentations-events.htm.
This conference call will also be webcast live over the internet
and can be accessed by all interested parties at the following URL:
http://www.autocan.ca/investors/Grossinger/.
About AutoCanada
AutoCanada
is Canada's largest multi-location automobile dealership
group by volume, currently operating 54 franchised dealerships,
comprised of 62 franchises, in eight provinces and has over 3,500
employees. AutoCanada currently sells Chrysler, Dodge, Jeep, Ram,
FIAT, Alfa Romeo, Chevrolet, GMC, Buick, Cadillac, Infiniti,
Nissan, Hyundai, Subaru, Mitsubishi, Audi, Volkswagen, Kia, Mazda,
Mercedes-Benz, Smart, BMW and MINI branded vehicles. In 2017, the
Company's dealerships sold approximately 63,000 vehicles and
processed approximately 870,000 service and collision repair orders
in our 999 service bays generating revenue in excess of
C$3 billion.
Forward Looking Statements
Certain statements
contained in this news release are forward‑looking statements and
information (collectively "forward‑looking statements"), within the
meaning of the applicable Canadian securities legislation. We
hereby provide cautionary statements identifying important factors
that could cause our actual results to differ materially from those
projected in these forward‑looking statements. Any statements that
express, or involve discussions as to, expectations, beliefs,
plans, objectives, assumptions or future events or performance
(often, but not always, through the use of words or phrases such as
"will likely result", "are expected to", "will continue", "is
anticipated", "projection", "vision", "goals", "objective",
"target", "schedules", "outlook", "anticipate", "expect",
"estimate", "could", "should", "plan", "seek", "may", "intend",
"likely", "will", "believe" and similar expressions) are not
historical facts and are forward‑looking and may involve estimates
and assumptions and are subject to risks, uncertainties and other
factors some of which are beyond our control and difficult to
predict. Accordingly, these factors could cause actual results or
outcomes to differ materially from those expressed in the
forward‑looking statements. Therefore, any such forward‑looking
statements are qualified in their entirety by reference to the
factors discussed throughout release.
Further, any forward‑looking statement speaks only as of the
date on which such statement is made, and, except as required by
applicable law, we undertake no obligation to update any
forward‑looking statement to reflect events or circumstances after
the date on which such statement is made or to reflect the
occurrence of unanticipated events. New factors emerge from time to
time, and it is not possible for management to predict all such
factors and to assess in advance the impact of each such factor on
our business or the extent to which any factor, or combination of
factors, may cause actual results to differ materially from those
contained in any forward‑looking statement.
Additional Information
Additional information about
AutoCanada Inc. is available at www.sedar.com and
the Company's website at www.autocan.ca.
SOURCE AutoCanada Inc.