Asbury Adds S.C. Dealership Group, Sheds Heavy-Truck Unit

By selling its heavy-truck business and buying a five-franchise dealership group in Greenville, S.C., Asbury Automotive Group Inc. says it is committing to the light-vehicle business completely.

Asbury, the No. 6 auto retailer in the United States, announced today the acquisition of the Greenville Automotive Group, which sells Lexus, Toyota, Jaguar, Porsche and Volvo at three stores. The transaction takes Asbury's store count from 81 to 84. The purchase is estimated to add about $125 million in annual revenues to the company. Asbury posted $3.7 billion in revenue in 2009.

Even as it bolsters its light-vehicle retailing footprint, Asbury said it has agreed to sell its Nalley Motor Trucks unit to Rush Enterprises Inc., the nation's largest commercial vehicle retailer. The Nalley truck unit produces about $220 million in annual revenues from three dealerships and a collision center in the Atlanta area.

It is profitable so far this year, but struggled in 2009, Asbury CFO Craig Monaghan said. The Rush purchase is expected to close during the first quarter and is subject to manufacturer approvals.

Today's moves underscore Asbury's strategic focus going forward, CEO Charles Oglesby told Automotive News.

“We do this well,” Oglesby said of the light-vehicle business. “The truck business appears to be a little more cyclical. But we felt that this puts us in our core business.”

Terms of the deals were not disclosed.

Well run stores

With the dealership purchase, Asbury expands its business in Greenville, where it already operates Crown Nissan. Company executives will add the Crown name to the new dealerships. The stores, sold to Asbury by owner Terry Wall, were well run, said Asbury COO Michael Kearney. But he expects to improve results by adopting Asbury's corporate F&I training and used-car initiatives.

Including its October purchase of Mercedes-Benz of St. Charles, Mo., the move brings Asbury's 2010 acquisition tally to four stores with estimated annual revenue of $145 million.

Asbury will continue to seek acquisition opportunities, though no other deals are on tap for this year.

“This is a big acquisition for us,” Monaghan said. “It's a very attractive acquisition, but it's also one that we'll need a little time to absorb.”

Asbury executives expect the acquisition and divestiture announced today to result in a $2 million increase in annual pre-tax income from continuing operations beginning in 2011.