Asbury Automotive Group in Discussions to Acquire Jim Koons Automotive
In an exciting development, Asbury Automotive Group Inc. has announced that it is currently in discussions to acquire Jim Koons Automotive Cos., another top 25 dealership group. While no definitive agreement has been reached yet, Asbury is optimistic about the potential transaction.
Asbury emphasizes that it will refrain from making further announcements until a definitive agreement is signed or the discussions are terminated.
If successful, the purchase of Jim Koons Automotive would provide Asbury with 20 new-vehicle stores and one used-only dealership in the Washington, D.C., area. It would also help Asbury achieve its goal of adding $6.2 billion in revenue through acquisitions by 2025, with the Koons group reporting $3.2 billion in revenue for 2022. Since setting this target in April 2022, Asbury has not made any purchases or divested any stores.
Analyst Glenn Chin from Seaport Research Partners estimates that Asbury could potentially pay between $640 million to $800 million for the Koons group, assuming the sale price is calculated at 20 to 25 percent of its revenue.
Jim Koons Automotive and Asbury Automotive Group
Jim Koons Automotive, based in Vienna, Va., holds the No. 23 spot on Automotive News’ list of the top 150 dealership groups in the U.S. The group achieved impressive retail sales of 26,188 new vehicles in 2022. Asbury, headquartered in Duluth, Ga., resides at No. 5 on the list, with retail sales of 151,179 new vehicles in the same year.
During Asbury’s second-quarter earnings call on July 25, CEO David Hult hinted at the possibility of a deal in progress without revealing the specific target.
“We are aggressively in conversations with acquisitions now,” Hult stated. “Obviously, we haven’t announced anything because we haven’t been able to land something that meets our criteria in the space and brands that we want. We’re hopeful with our current [dialogue] that something will come together. But, as you know, these things take time, and you just have to play them out.”
Impressive Lineup and Potential Synergies
The Koons group boasts a diverse range of franchises, including Buick, Chevrolet, Chrysler, Dodge, Ford, GMC, Hyundai, Jeep, Kia, Lexus, Mercedes, Ram, Toyota, and Volvo. It operates rooftops in Delaware, Maryland, and Virginia.
Analyst Glenn Chin describes the Koons group as “a large, well-run group of stores” that could potentially boost Asbury’s revenue by 20 percent. Furthermore, the Koons footprint complements Asbury’s existing operations nicely, especially considering that Asbury currently only operates four stores in Virginia.