Lithia purchases LA auto group
After buying a Pittsburgh dealer group this spring, Lithia Motors turned its attention to the West Coast with its latest acquisition.
The retailer announced Tuesday it has purchased Downtown Los Angeles Auto Group.
The California group, also known as DTLA, includes Audi, Mercedes-Benz, Nissan, Porsche, Toyota and Volkswagen dealerships located in downtown Los Angeles plus a Nissan dealership in Carson, Calif.
Lithia projects DTLA can bring in $1 billion in revenue annually along with $0.55 per share in earnings. With the acquisition, Lithia has upped its earnings guidance for 2017 to $8.55 to $8.70 per share.
“We are pleased to continue our robust acquisition cadence of purchasing strong assets with considerable upside,” Lithia president and chief executive officer Bryan DeBoer said in a news release.
“These stores are located in the fast-growing downtown area, within close proximity to the Staples Center and L.A. Live, and are among the largest volume stores of their brands in the nation,” DeBoer said. “We are excited to partner with Elay Sung and the entire Downtown LA team to accelerate their growth.”
Lithia expanded its operations to Pennsylvania with the purchase of Baierl Auto Group in a deal announced in May.
Lithia bought DCH Auto Group in the summer of 2014 and then the Carbone Auto Group last September.
The company said in its news release that the addition of these groups helps to “further diversify Lithia and grow through sharing best practices, high-performing people and innovative technology.”
The retailer is aiming to boost its “omnichannel retail strategy focused on expanding its customer base from coast to coast,” it said.
“This opportunity deploys approximately half of the $300 million raised in our recent senior notes offering,” said DeBoer. “The remaining funds from the notes offering, our free cash flow and a recently increased syndicated credit facility support our continued growth cadence. Improving performance to realize the full potential of our acquisitions achieves greenfield rates of return.”